7/8/24
The Market
Technical
The S&P regained its mojo last week; and if
history is any guide, this week should be more of the same. (1) The index remains
above all DMA’s and in uptrends across all time frames and (2) there is little
visible resistance save the upper boundaries of its intermediate term uptrend
(~6800) and long term uptrend (~7100). The only negative is that the three
weeks old gap up open still needs to be filled. But even when that occurs,
there will be almost no technical damage done to this chart. All that said, there
is mounting concern among technicians about the lack of volatility and breadth;
and I am developing a case of altitude sickness.
The best of times; the worst of times.
https://www.bespokepremium.com/interactive/posts/think-big-blog/the-best-of-times-the-worst-of-times
From the head of Goldman’s hedge fund overage.
The long bond got a reprieve helped along by dovish
FOMC minutes and a weak employment report which supported the growing consensus
that the economy is slowing. The pin action voided last Friday’s challenges of both
its 100 and 200 DMAs. On the other hand, TLT remains within downtrends across
all timeframes. The good news is that it can rally a great deal before it challenges
any of those downtrends.
GLD had a good week. It (1) broke the trend of lower lows, (2) which also terminated the development of that head and shoulders formation and (3) reset its very short term trend to up. The bad news is that it did so on two gap up opens. While those gaps will need to be filled, it appears that gold may be reasserting itself to the upside. I retain my GDX position.
The dollar was down on the week, but there was no
technical damage. It remains above all DMAs and in a well-defined very short
term uptrend. I pointed out last week that it is approaching the upper boundary
of its short term downtrend (brown line), i.e., resistance. That puts it into a
developing pennant formation defined by the lower boundary of a very short term
uptrend and the upper boundary of that short term downtrend. Resolution may be
a ways off but I will be paying attention as it approaches either of those
boundaries.
Friday in the charts.
Fundamental
Headlines
The Economy
Week
in review
Last week’s stats were again quite negative, topped
off by dovish FOMC minutes on Thursday and poor jobs numbers on Friday. Likewise
the primary indicators were two minus, zero plus, zero neutral. So we can
almost surely say that the economy is slowing. The question, of course, is how
slow: ‘muddle through’ slow or recession slow? (the overseas stats support the
latter). I am not yet ready to give up on my ‘muddle through’ call, though a couple
more weeks of dramatically slowing evidence and I may have to return to my
original recession forecast. For the moment, it remains:
(1) the economy muddles through and (2)
inflation has likely seen its lows. But clearly my confidence in that outcome
is weakened.
While not quite enough to warrant altering my
forecast, another couple of weeks of discouraging numbers will. In short, (1)
my original recession call may turn out to be correct and (2) while I continue
to believe that profligate fiscal policy and an accommodative Fed will
ultimately lead to higher inflation, a recession could work against that
scenario in the near term.
https://thehill.com/opinion/finance/4754075-janet-yellen-inflation-target/
And I would add that if (1) recession is the
ultimate scenario and (2) the Fed maintains its tight money policy, then
conditions could develop even worse.
US
International
The May German trade balance was +E24.9 billion
versus estimates of +E21.1 billion.
Other
June vehicle sales.
https://www.advisorperspectives.com/dshort/updates/2024/07/05/vehicle-sales-as-of-june-2024
Inside the June employment report.
https://www.calculatedriskblog.com/2024/07/comments-on-june-employment-report.html
Monetary Policy
Despite the more hawkish ‘dot plot’ from the last
FOMC meeting, the minutes were a bit dovish. Typical of the Fed’s ‘on the one
hand, on the other hand’ routine of the past dozen years.
A
rate cut in July?
Rate Cut In July? - RIA
(realinvestmentadvice.com)
Fiscal Policy
Gradually,
then suddenly: debt and deficits.
https://www.advisorperspectives.com/commentaries/2024/07/05/gradually-suddenly-us-debt-deficits
Recession
Real
time Sahm Rule.
https://econbrowser.com/archives/2024/07/consensus-real-time-sahm-rule-for-june
Bottom line
Hedge funds buying energy and materials
stocks.
June dividends by the numbers.
https://politicalcalculations.blogspot.com/2024/07/dividends-by-numbers-in-june-2021-and.html
The risk of a replay of the lost decade in
stocks.
https://www.ft.com/content/a3b2789b-66bb-41a1-b9b5-a1eba0b1a2cf
The role of luck in investing (and life).
https://www.safalniveshak.com/the-silent-force-driving-success-in-life-and-investing/
In praise of following your discipline.
https://allstarcharts.com/right-analysis-wrong-result/
For those interested in bonds.
https://www.convexitymaven.com/wp-content/uploads/2024/07/Convexity-Maven-Of-Horses-and-Water.pdf
News on Stocks in Our Portfolios
What I am reading today
We don’t have an energy or climate crisis;
we have a thinking crisis.
Inside the world of ancient Roman
grooming.
Inside the grooming habits of ancient Rome
(nationalgeographic.com)
Visit Investing for Survival’s website (http://investingforsurvival.com/home) to learn more about our Investment
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