Monday, May 12, 2025

Monday Morning Chartology---US/China reach temporary agreement

 

 

5/12/25

 

 

The Market

         

    Technical

 

The S&P eked out a gain on the week but remained below its 200 DMA. As I noted last week, that is my near term focus. If the S&P can push through it, then it highly likely that the bottom has been made and 2025 will be another up year---barring, of course, another Trumpian-induced clusterf**k. On the other hand, if it is unable to mount that resistance level (currently at ~5749), a test of the lows can’t be ruled out. I continue to believe that we have seen the worst, again absent a random or Trump initiated negative surprise.

 

Key S&P model turns bearish.

https://www.bloomberg.com/news/articles/2025-05-09/key-s-p-500-model-turns-bearish-for-first-time-in-two-years?srnd=homepage-americas&sref=loFkkPMQ

 

The latest rom Goldman’s trading desk.

https://www.zerohedge.com/markets/only-material-buyer-dip-was-mr-mrs-retail-goldman-macro-trader-sees-path-real-market

 

The latest ‘follow through’ day.

https://www.investors.com/how-to-invest/investors-corner/sp500-nasdaq-palantir-pltr-stock/

 


 

 

 

The long bond quietly meandered through the week---much like the S&P. Only its direction was down. There remains the possibility of its retesting its lows. I continue to be highly uncertain about the forces of inflation, hence the likely direction of Fed policy, hence the ultimate direction of interest rates (bond prices). Higher tariffs could mean higher inflation (and hence higher interest rates); but it could also mean higher unemployment suggesting lower interest rates.  On the other hand, lower tariffs and a stronger economy could also mean higher interest rates. You see the problem and why I have backed off any inflation/interest rate forecast. Although surely, the chance of a more sanguine outlook on tariffs (hence inflation) will cushion any momentum to the downside.

 

 

 


 

 

GLD’s performance mirrored that of the S&P---it traded aimless but slightly to the upside. So nothing really changed: 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 inched even higher last week though it remained solidly in a downtrend and below all three DMAs. Until it can show any solid signs of recovery, the assumption has to be that it is heading lower.

 

 




            Friday in the charts.

            https://www.zerohedge.com/market-recaps/crypto-soars-stocks-snore-rate-hawks-roar-trade-war-tension-floors

 

 

            Friday in the technical stats.

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

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

 

    Fundamental

 

       Headlines

 

              The Economy

 

It was a slow week for US stats. What we got was very slightly positive (no primary indicators).  So nothing that would warrant me backing off my concern about recession; but nothing that would increase it.

 

Overseas, the numbers were extremely upbeat. That does assuage my recession anxieties somewhat.

 

The other notable development was the change in the mainstream medias narrative about tariffs/the economy---from projecting disaster to comments that suggest that maybe it can be avoided. I am not sure what that is worth given my extremely low opinion of their views. But if they are starting to hedge their ‘end of the world’ rhetoric, maybe they are getting apprehensive that conditions may not be as bad as they have been projecting.

 

Apparently for good reason.

https://www.zerohedge.com/markets/fake-news-narrative-empty-ports-empty-shelves-suffers-spectacular-implosion

 

Not to be repetitious, but while I have made it clear how opposed I am to Trump’s tariff policy as originally presented (except in the case of the Chinese and those instances where opposing tariffs were extremely punitive), I allowed that I had no idea about his end game---which may not result in a scenario nearly as bad as I feared.  Judging by the terms of the US/UK agreement thus far revealed (recognizing that one occurrence doesn’t make a case), the media is probably smart to start crawfishing on their ’economic disaster’ story line.

https://www.zerohedge.com/markets/financial-medias-tariff-incontinence-retrospective

 

That doesn’t mean that there are not going to be problems especially with respect to the trade with the Chinese, damage to our relations with allies and lessening the chances of getting Trump’s domestic agenda passed. So I am not sounding an ‘all clear’ signal. I am saying that the downside economically/Marketwise is likely shrinking.

 

Bottom line. Short term, the odds of recession are still higher than they were two weeks ago; though longer term, if the US/UK trade deal is any sign, the damage from Trump’s self-induced chaos may be less than originally feared. I remain too unsure about inflation to offer a prediction.

 

                        US

 

                        International

 

                          April Chinese YoY auto sales rose 9.8% versus forecasts of +7.0%.

 

                        Other

 

                          Rail car loadings up in April.

                          https://www.calculatedriskblog.com/2025/05/aar-rail-carloads-and-intermodal-up-in.html

 

            Monetary Policy

 

              Things are about to get complicated.

  https://www.bloomberg.com/opinion/articles/2025-05-09/trump-tariffs-trade-twists-are-latest-complication-for-powell-s-fed?srnd=homepage-americas&sref=loFkkPMQ

 

 

            Recession

 

              So far, not happening.

              https://wolfstreet.com/2025/05/08/recession-watch-time-to-dig-out-our-favorite-recession-indicator-again/

 

                  Part 2.

              https://bonddad.blogspot.com/2025/05/more-fuel-to-help-consumers-deal-with.html

 

                  Or is it already over?

              DEEP DIVE: Is The Recession Over Already?

 

                  Employment confirms that the economy is slowing.

              Employment Data Confirms The Economy Is Slowing - RIA

 

                Tariffs

 

              US/China reach temporary agreement.

              https://www.zerohedge.com/markets/us-china-reach-agreement-lower-tariffs-90-day-cool-period

 

      Investing

 

                The latest from BofA.

            https://www.zerohedge.com/markets/buy-news-sell-fact-hartnett-sees-stocks-sliding-after-trade-deals-revealed

 

                The future.

https://www.riskhedge.com/outplacement/i-visited-a-19-million-nuclear-energy-startup/rcm?utm_campaign=RH-144&utm_content=RH144OP773&utm_medium=ED&utm_source=rcm

 

                Did Trump just tell us what is coming?

            https://talkmarkets.com/content/us-markets/president-trump-just-told-us-whats-coming?post=496735

 

                Six reasons the Market uncorrected.

            https://www.downtownjoshbrown.com/p/six-reasons-we-uncorrected

 

                ETH and bitcoin prices surge.

            https://www.theblock.co/post/353816/eth-and-bitcoins-price-surge-wipes-out-nearly-900-million-in-crypto-shorts-as-momentum-builds

 

    News on Stocks in Our Portfolios

 

What I am reading today

 

           

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