11/25/24
I
am taking this week off. Have a Happy Thanksgiving.
The Market
Technical
The S&P continued its somewhat erratic behavior,
reversing the prior week’s sell off and closing a gap down open. While it has
not filled the huge gap up open of 11/6 (a negative), it still has a number of
pluses going for it: (1) seasonally, it a positive time of the year, (2) with
Trump’s appointments, the long term economic outlook is improving [deregulation
and lower spending], (3) there has been little post-election disturbances.
https://www.zerohedge.com/the-market-ear/perfectly-normal-pause-ahead-year-end-melt
So, my conclusion remains ‘the downside risk to
stock prices has been truncated.’
That said, it is early to be getting too jiggy with
a possible improving economic outlook. So, patience is still in order.
The long bond reset is very short term trend to
down, though it may be stabilizing at current levels---note how close it is to
pushing through the upper boundary of the new very short term downtrend. The
bad news is that it remains below all three DMAs. The good news is that (1) the
lower boundary of its intermediate term downtrend offers some hope of support
and (2) there are multiple gap down opens overhead that offer magnetic pull to
the upside. Let’s see if it can push out of that very short term downtrend.
GLD made a spectacular recovery from the prior
week’s shellacking, bouncing off its 100 DMA, resetting its 50 DMA and
revitalizing the somewhat confusing (at least to me) ‘gold up, interest rates
up, dollar up’ scenario.
The dollar continued to shoot the moon ‘not
suggesting but shouting that investors think that either something enormously
positive is occurring or about to occur in the US or that something enormously negative
is occurring or about to occur internationally.’
It appears that the former is the more likely of
the two. As I noted above, the initial news (cutting spending) out of the new
administration is a pleasant surprise, made more so given the horrendous shape
of the country’s fiscal position. As a result, UUP having reset its short term
trend from down to a trading range in the prior week, now appears to be in the
process of resetting it to an uptrend. That also means that it will confirm an intermediate
term uptrend and completely reverse the downward moment that has existed since
October 2022.
Friday in the charts.
Fundamental
Headlines
The Economy
Week
of review
Last week’s US economic stats were slightly upbeat
though the primary indicators were negative (one plus, zero neutral, two minus)---again
confirming my ‘muddle through’ scenario. There was no price data.
Overseas, the numbers were terrible; attributable
mainly to some very poor flash PMI stats.
There was also some CPI/PPI reports and they were mixed.
My forecast remains: (1) the economy ‘muddles
through’ and (2) inflation has likely seen its lows.
Two developments that we need to watch with respect
to their potential effect on this scenario are:
(1)
if Europe starts to flounder, coupled with an
already weak Chinese economy, at some point that should negatively impact the
US especially if Trump goes through with his tariff plan as it has been
presented.
https://www.axios.com/2024/11/21/trump-tariffs-imports-gdp
(2) in addition, if
Trump’s cost cutting and deregulation measures are enacted that should in the
short term lead to higher unemployment. Although it would, in my opinion,
dramatically improve the long term outlook for growth and productivity.
My point here is that I think that with Trump’s
election, the level of economic uncertainty is higher than normal, at least in
the short term, and all economic forecasts should be viewed accordingly.
US
The October Chicago national activity index came in
at -.4 versus estimates of -.2.
International
The November German business climate index was 85.7
versus predictions of 86.0; the November current conditions index was 84.3
versus 85.4.
Other
The divergence between initial and continuing
jobless claims.
https://www.capitalspectator.com/us-continuing-jobless-claims-rise-to-3-year-high-time-to-worry/
The latest Q4 nowcast.
https://www.calculatedriskblog.com/2024/11/q4-gdp-tracking-mid-2-range_22.html
Fiscal Policy
Bessent
in Treasury brings sigh of relief.
https://www.zerohedge.com/markets/bessent-treasury-will-bring-another-relief-rally-wall-street
Tariffs
Trump’s
tariffs would smother is economic successes.
Investing
Rate
cuts will boost M&A and IPOs
https://www.apolloacademy.com/fed-cuts-boosting-ma-and-ipos/
Market
forecasts are very bullish.
Market Forecasts Are Very Bullish - RIA
Latest
from BofA.
https://www.zerohedge.com/markets/hartnett-it-would-almost-be-surprise-sp-not-hit-6666
News on Stocks in Our Portfolios
What I am reading today
What
archaeology is telling us about the real Jesus.
What archaeology is telling us about the
real Jesus
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