Monday, May 19, 2025

Monday Monring Chartology

 

 

5/19/25

 

 

The Market

         

    Technical

 

The S&P continued to push higher, closing above both its 100 and 200 DMA and resetting them from resistance to support---which provides additional strength to the notion that we have seen the bottom. The question now is, is it going to make a new high. Weighing in favor is that there is no visible resistance between the current level and that high (~6147). Against: (1) there are those two gap up opens that need to be closed and (2) currently stocks are overbought.  Of course, it can make a new high and then settle back and close those gaps. Or it could do the opposite.

 

Whatever the path, my strategy is not to chase stocks at these levels but to wait for a correction to add to any holdings---assuming Trump doesn’t come up with another brilliant program like Liberation Day or Big Beautiful Bill.

 

Goldman thinks that this rally can continue (but I think that they are wrong on inflation).

https://www.zerohedge.com/markets/buy-may-and-let-it-play-goldman-traders-see-near-term-overshoot-sp

 

 


 

The long bond bounced off the lower boundary of its very short term trading range for the third time---makes me think this could be the low and/or my observation last week could be spot on: the chance of a more sanguine outlook on tariffs will cushion any momentum to the downside. On the other hand, the risk of inflation still weighs to the upside given the Big, Beautiful Bill in its current form. That would suggest further downside in TLT. This all makes me think that while we may have seen the worst, there is little chance of a meaningful rally in the near future, at least until we get some further clarity on tariffs and spending.

 

 


 

After making a lower high, GLD sold off on the week making a new lower low. It is now resting on its 50 DMA. If it bounces, it will likely be good for a trade (if you don’t already own it). If it doesn’t, then the next support levels are at its 100 DMA and the lower boundary of its very short term uptrend---then a rebound might be playable. In the meantime: It remains well within a very short term uptrend and in uptrends across all other time frames as well as above all DMAs. Let’s see where the correction goes but for the moment, I would stay with what works.

 

 

 


 

 

 

The dollar bounced hard last week. In the process, it traded up to its 200 DMA (now resistance) and the upper boundary of a downtrend off its 12/19 high. Let’s see if it can push through those resistance levels. But for the moment, the assumption remains that it is heading lower.

 

 

 


 

 

            Friday in the charts.

             https://www.zerohedge.com/market-recaps/stocks-soars-most-covid-lows-gold-gags-trade-policy-uncertainty-plunges

 

            Friday in the technical stats.

            https://www.barchart.com/stocks/momentum

            https://www.barchart.com/stocks/sectors/sectors-heat-map

 

    Fundamental

 

       Headlines

 

              The Economy

 

The US stats last week were tilted slightly to the upside as were the primary indicators (two plus, two neutral, one minus). That makes me feel somewhat better about the growth prospects for the economy, i.e., the odds of a ‘muddle through’ scenario improved.

 

I don’t think that we can dismiss entirely the risk of another nuclear blast coming out of the White House that would again raise the odds of recession. But hopefully that risk is falling.

https://talkmarkets.com/content/us-markets/recession-probabilities-decline?post=498082

                                                                                                             

Overseas, the numbers were again extremely upbeat---helping further to assuage my recession anxieties.

 

As for my highly uncertain outlook on inflation, that gained some clarity last week as we got a look at the horrible, terrible new fiscal budget which the house is now trying to push across the goal line. As you know, for years one of my biggest economic concerns has been the irresponsible fiscal management of our country’s finances. Both parties are equally guilty. Trump/the GOP were in his first term and this latest Big, Beautiful Bill is in my opinion is disgraceful. (Trump has the penchant for labelling his policies the exact opposite of the likely result---the other example being Liberation Day).

 

And yet.

https://www.zerohedge.com/political/house-republicans-advance-trumps-big-beautiful-bill-after-weekend-negotiations

 

In its current form, this new example of fiscal irresponsibility continues our march to higher inflation, higher interest rates, and a declining dollar. To be sure, DOGE’s efforts along with whatever new tariff revenue will help slow the growth of our deficit/national debt. But more, much more is needed to stop/reverse the trend of spending.

 

And this just isn’t my opinion.

https://www.zerohedge.com/geopolitical/moodys-downgrades-usa-credit-rating-aaa

 

Bottom line. Short term, the odds of recession, in my opinion, continue to drop. Longer term, the inflation outlook is more visible and getting worse.

 

                        US

 

 

                        International

 

                          The April EU CPI came in at +0.6%, in line.

 

                        Other

                       

                          This seek in the economy.

                          ECONOMIC WEEK AHEAD: May 19–23

 

      Investing

 

                The latest from BofA

            https://www.zerohedge.com/markets/hartnett-how-trade-next-big-bull-market

 

    News on Stocks in Our Portfolios

 

What I am reading today

 

            The most accident prone cars in America.

            https://www.zerohedge.com/technology/these-are-most-accident-prone-cars-america

 

 

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