The Morning Call
10/20/25
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The
Market
Technical
The S&P toyed all week with its 50 DMA
and that very short term uptrend off of the May low---a slight loss of momentum.
But nothing to get exercised about, at least not yet. Some backing and filling
is only natural after the huge run since April. Plus, the S&P remains above
all three DMAs, in uptrends across all timeframes and is moving into the most
positive seasonal time of the year.
Despite being richly valued, I don’t think we
are in danger of a major downtrend in the absence of (1) a credit crisis, (2) a
disappointing earnings season or (3) some negative exogenous event.
Still just for technical reference purposes,
just beware of where support exists: [50 DMA~6532, 100 DMA~6310, 200
DMA~6042, the lower boundary of its short term uptrend~5597].
I remain of
the opinion that this is a market to trade not invest in long term. If you do,
be sure to have close in stops.
The bond market continued
to rally and has now made three higher lows and two higher highs---a decent
sign of some sort of change in direction. The good news is that it is above all
three DMAs. The bad news is that it is in downtrends across all time frames. You
can see the upper boundary of its short term downtrend. I wouldn’t bet heavily
on a change of direction until that threshold is breached.
Tail risks rising
in bond market.
https://www.zerohedge.com/markets/bond-market-shows-tail-risks-are-rising
Despite the
pasting it took on Friday, gold was still up on the week and made a new all-time
high. It remains above all three DMAs and in uptrends across all timeframes. So,
it will take a lot more than a one day air pocket to change GLD’s upside
momentum. As you know, I sold the remainder of my position in gold last week. But
in all likelihood will re-establish it when, as and if we get a sign of a
rebound.
Ray Dalio on gold.
https://www.zerohedge.com/precious-metals/ray-dalio-explains-why-gold-why-now
Wither gold?
The gold and silver
boom is ominous.
https://www.zerohedge.com/precious-metals/gold-and-silver-boom-ominous
The dollar was down on
the week, following on with its decline after the Trump tariff announcement---clearly
much less sanguine about the development than the other indices. That said, it continues
to try to reverse its recent downtrend, remaining above it 50 and 100 DMAs.
Unfortunately, it bounced off its 200 DMA twice. So, there is still work to do before
I can assume that the worst is over,
Friday in the
charts.
Friday in the
technical stats.
https://www.barchart.com/stocks/momentum
https://www.barchart.com/stocks/sectors/rankings
https://www.barchart.com/stocks/signals/new-recommendations
Fundamental
Headlines
The
Economy
With the
government shutdown continuing, there were very few stats released last week. What
was produced was slightly negative. But I don’t look at that as anything but
noise. Overseas, the indicators were quite negative with three neutral and one
negative inflation datapoint.
So, there is no reason
to alter my ‘muddle through’ forecast. The inflation numbers, while a tad negative,
didn’t alter my weak conviction in my ‘inflation is as good as it is going to
get’ call.
The most important
event of the week was the increasing apparent deterioration in the credit markets
(two bankruptcies, two large bank write offs). There are experts on both sides
of the question of whether or not the US may be facing another credit crisis. History
has shown that as Jamie Dimon said, ‘where there is one cockroach, there are usually
more’. So whether or not we have a crisis,
we should certainly be on alert---meaning one more negative event will activate
the yellow flashing light on my ‘muddle through’ scenario.
It also reinforces
my position that this is a Market to trade not invest in.
US
International
August EU YoY construction
output was up 0.1% versus expectations of +2.7%.
Q3 YoY Chinese GDP
growth was 4.8% versus consensus of 4.9%; Q3 YoY industrial production was up
6.5% versus +5.1%; Q3 YoY retail sales were up 3.0%, in line; Q3 YoY fixed
asset investments fell 0.5% versus +0.3%; the September unemployment rate was
5.2%, in line.
September German
PPI was -0.1% versus projections of -0.2%.
Other
Geopolitics
Has Xi lost control of the Chinese military?
https://www.zerohedge.com/geopolitical/has-xi-jinping-lost-control-chinas-military-and-china-itself
Investing
Regime breakdown.
https://www.zerohedge.com/markets/regime-breakdown-biggest-macro-event-decades
The final crisis.
https://www.zerohedge.com/personal-finance/final-crisis-our-future
The latest from BofA.
https://www.zerohedge.com/markets/hartnett-fed-will-cut-aggressively-when-krunchy-kredit-cracks
News on Stocks in Our Portfolios
Qualcomm (NASDAQ:QCOM) declares $0.89/share quarterly dividend, in line with previous.
What
I am reading today
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