The Morning Call
10/27/25
The
Market
Technical
The S&P reset that very short term
uptrend off of the May low, pushed above its all-time high and with it a return
to upside momentum. That doesn’t alter the slowing rate of change since April;
but mathematically that had to happen. Overall, 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.
Nonetheless, 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 latest from
Citadel.
The latest from
Goldman.
https://www.zerohedge.com/markets/goldmans-tech-traders-brace-huge-week
The bond market continued
to rally (though it was down for the week) and has now made three higher lows
and three 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 and is nearing the upper boundary of its
short term downtrend. I wouldn’t bet heavily on a change of direction until
that threshold is breached.
Gold was flattish
on the week. The good news is that 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. The bad news is that its recovery has
been halting at best. I am still contemplating re-establishing my trading position
in GDX, but gold is going to have to show more life before I do.
Retail buying of
gold is not yet extreme.
https://www.zerohedge.com/precious-metals/retail-buying-gold-not-yet-extreme
The dollar was up on the
week and (1) has managed to remain above its July low and (2) is trading above
its 50 and 100 DMAs, but has failed to surmount its 200 DMA---which it must 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 positive, including two upbeat primary indicators, one of
which was inflation related. Overseas, the indicators were again quite negative
with one positive and two negative inflation datapoints.
Despite the US
favorable stats, there are too few for me to consider altering my ‘muddle
through’ forecast. The inflation number was another factoid that weakens my already
weak conviction in my ‘inflation is as good as it is going to get’ call.
https://bonddad.blogspot.com/2025/10/september-consumer-inflation-re.html
From sprint to
stroll.
https://www.advisorperspectives.com/commentaries/2025/10/24/sprint-to-stroll
Perhaps the most
important event of the week was release of the September CPI number, in that it
likely (1) ensures an October rate cut and (2) heralds the end of QT.
I would also opine
that despite no new negative developments; it is too soon to dismiss the
apparent deterioration in the credit markets. As I noted last week: 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
Consumer sentiment falls.
International
The October German
business climate index came in at 88.4 versus consensus of 87.0; the October current
conditions index was 88.3 versus 85.1.
Other
The week ahead.
Economic
Week Ahead: October 27-31
AI boom—debt versus equity.
https://www.apolloacademy.com/ai-boom-debt-vs-equity/
The fiscal impact
of immigration (this piece is a bit long and in the weeds; at least read the
summary and conclusion).
The rising American living standard.
https://thedailyeconomy.org/article/four-ways-youre-living-better-than-ever/
Fiscal
Policy
US state capitalism is destined to failure.
Tariffs
Betting odds of the Supreme Court upholding
Trumps tariffs.
https://econbrowser.com/archives/2025/10/imagine-no-ieepa-tariffs
US/China agree on trade ‘framework’.
Investing
The myth of ‘a stock pickers market’.
https://www.morningstar.com/stocks/myth-stock-pickers-market
The case against piling into gold.
The latest from BofA.
https://www.zerohedge.com/markets/hartnett-us-china-trade-deal-may-be-end-rally
News on Stocks in Our Portfolios
What
I am reading today
A
new source of rare earth elements.
https://arstechnica.com/science/2025/10/breaking-down-rare-earth-element-magnets-for-recycling/
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