5/27/24
I
am taking this week off, back on June 3rd. Have a great Memorial Day.
The Market
Technical
The S&P was flattish on the week. It remained
above the upper boundary of its short term uptrend---which is a resistance area.
And that is good news. Right now it is above all DMA’s and in uptrends across
all time frames. So saying that momentum remains to the upside is a no brainer.
Adding to the good news is that there is little visible resistance save the upper
boundaries of its intermediate term uptrend (~6800) and long term uptrend
(~7100). That said, the fundamentals got a bit cloudier last week; plus
valuations are stretched. In short, while the S&P is likely not topping out,
don’t be surprised if we are entering a period of consolidation.
The latest from Goldman’s trading desk.
As you can see, the long bond traded right up to
the confluence of its 200 DMA and the upper boundary of a very short term
downtrend and stopped dead in its tracks. I noted last week that this area
would likely take some time and effort to get through and that seems to be the
case. On the other hand, TLT remains (1) below its 100 and 200 DMAs and (2) in
downtrends across all timeframes. So the promise of lower rates (higher prices)
is just that---a promise. Too soon to make that bet.
Yields will stay higher of longer.
https://www.zerohedge.com/markets/yields-will-stay-higher-longer-commodities
GLD took it on the chin last week, breaking below the
recently reset lower boundary of a very short term uptrend. I asked last week,
where will gold find resistance? I guess the question should have been, where
is solid support? Given (1) it remains above all its DMAs and in uptrends
across all timeframes except for the very short term and (2) my concern about
the current irresponsible fiscal and monetary policies, I think that GLD will
find near in support and continue to make new highs. I maintain my GDX (gold
miners ETF) trading position.
The dollar had an up week, holding above the lower boundary
of its very short term uptrend and its 50 DMA. That is the good news. But it
failed to push through its 200 DMA---the bad news. While I think that the
fundamentals suggest a lower dollar, the techincals have yet to support that
notion. I am on the sidelines as to what happens next.
Friday in the charts.
https://www.zerohedge.com/markets/best-macro-week-4-months-bad-news-most-nasdaq-and-ethereum-surged
Fundamental
Headlines
The Economy
Week
in review
Last week’s stats tilted to the plus side though negative
primary indicators outweighed positives two to one. That is the kind of report
that reflects a ‘muddle through’ economy.
No real news on the inflation front save the FOMC
minutes which expressed more concern about it than many expected. But that
report was a bit out of date. That said, I continue to believe that inflation
is as good as its going to get absent a more fiscally responsible congress and
less compliant Fed. Clearly, I don’t believe the ‘higher for longer’ storyline
the Fed is trying to sell.
Bottom line:
(1)
as long as the government pursues its current
spend, spend policy, I don’t see us making any further progress in lowering the
inflation rate. Indeed, I don’t think that the Fed has any choice but to
continue monetizing the government IOUs.
https://www.cato.org/blog/will-economic-growth-be-short-lived-fiscal-challenges-abound
(2) the economy seems
to be returning to its pre-covid sluggish growth path---the result primarily of
the ‘crowding out’ effects of irresponsible government spending/financing.
Ten steps to
how we got here. Notice how many are directly or indirectly related to poor monetary/fiscal
policies.
https://ritholtz.com/2024/05/10-steps-to-how-we-got-here/
US
International
Other
The Fed
Recognizing
that it doesn’t know diddley.
Recession
Recession
alert weekly leading economic index.
Consumer
data suggest that the economy is weakening.
Consumer Data
Suggests Economy Is Weakening - RIA (realinvestmentadvice.com)
Inflation
Another
data revision that makes mincemeat out the prevailing narrative.
For
policymakers recession is more consequential than inflation.
Civil Strife
The
widening wealth gap.
China
China’s
plan to solve its housing problem is not enough.
https://www.nytimes.com/2024/05/24/business/china-property-crisis.html
News
on Stocks in Our Portfolios
What I am reading today
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