The Morning Call
8/10/26
The
Market
Technical
The S&P
exploded out of the box, then spent the rest of the week consolidating. Importantly,
it confirmed the breakout above its prior all-time high. Meanwhile, it remains above
all three DMA as well as being in uptrends across all timeframes. So, the upside
momentum has returned. The next visible resistance points are (1) the upper boundary
of it short term uptrend [~7830] and (2) the convergence of the upper
boundaries of its intermediate and long term uptrends [~9167]. As you know, I added
two half positions last week (BRO, GDX) and will likely do more of the same
this week.
The long bond continued
its dismal performance---not surprising given oil prices (the war), the
prospect for a new round of tariffs, the ruling class drunk on deficit spending
and Warsh’s performance at his virgin FOMC presser. I am surprised that the
poor jobs report on Friday didn’t have a more positive impact on bond
prices---which suggests that the bond boys are taking it with a grain of salt (see
below for a possible explanation). Bottom line, the technicals haven’t changed: TLT
is below all three DMAs and in downtrends across all timeframes;… for the long
bond to rise enough to even challenge the upper boundary of its very short term
downtrend is going to take a series of very positive developments.
GLD had a spectacular
week, bouncing off the lower boundary of its short term uptrend, resetting its
50 DMA to support and preparing to challenge the upper boundary of a very short
term downtrend. Quite a reversal from the prior week. Given its momentum, it
seems likely to break out of that very short term downtrend. Though it has some
work to do with both the 100 and 200 DMAs right overhead. Let’s see how it
handles those hurdles. As I noted above, I think that it will overcome them.
Gold is moving.
The dollar continued its poor
performance, negating a very short term uptrend and resetting its 50 DMA from
support to resistance. On a long term basis, the dollar remains in no man’s
land and at this point I see like prospect of its breaking out of even its
short term trading range. Technicals aside, a spendthrift ruling class, higher
oil prices and a weak kneed Fed is all the explanation one needs to understand where
it is trading.
Friday in the charts.
https://www.zerohedge.com/markets/peace-plans-payrolls-plunge-trigger-plunge-rate-hike-odds-precious-metals-best-week-6?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTIwNzcyIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc4NjEzNDQ3MywiZXhwIjoxNzg4NzI2NDczLCJhdWQiOiJ6aC1naWZ0In0.yGkdwngvuLvYwScY7je5Gk-Ey-lQ64mniHKPtzeuItg
The weekend in the charts.
https://www.zerohedge.com/the-market-ear/panic-eradicated-republicans-rolling-over-sell-signals-everywhere?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTIwODg3Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc4NjI4OTg4OCwiZXhwIjoxNzg4ODgxODg4LCJhdWQiOiJ6aC1naWZ0In0.ppCm3TgG-fvoOzyLeXBZJu4gZdTsXP-1lb9epxKYNL4
Friday in the technical stats.
https://www.barchart.com/stocks/momentum
https://www.barchart.com/stocks/market-performance
https://www.barchart.com/stocks/sectors/rankings
https://www.barchart.com/stocks/signals/new-recommendations
The latest from Goldman.
https://www.zerohedge.com/markets/goldmans-pasquariello-sp-breakout-intact-market-still-has-work-do-after-labor-day?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTIwNzgwIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc4NjEzMjgxMiwiZXhwIjoxNzg4NzI0ODEyLCJhdWQiOiJ6aC1naWZ0In0.ShEp_k16JTR5iIz5gf37UIJSOYBV1iYXYJANAF8RdnY
Hedge funds resume shorting.
https://www.zerohedge.com/markets/one-week-after-biggest-short-squeeze-2020-hedge-funds-resume-shorting?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTIwOTMzIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc4NjM2NjA3MywiZXhwIjoxNzg4OTU4MDczLCJhdWQiOiJ6aC1naWZ0In0.HKDiGIoOkrMwNyQshGRTKsZwPVOV2IN81Q9j79QVP7U
Bitcoin breakout.
https://talkmarkets.com/article/bitcoin-breakout-the-best-setup-ive-seen-in-months-1786126943
Monday morning
setup: US equity futures start the new week barely higher, having erased almost
all of their overnight gains, yet still trading at all-time highs, led by Tech
with small caps starting the week in the red. As of 8:00am ET, S&P futures
are fractionally in the green as traders look to the next big data print
from the US this week in the form of CPI and PPI updates, as bets on September
rate hikes tumbled after Friday's jobs debacle; Nasdaq futures rise 0.1%. In
premarket trading, both Mag7 and Semis are higher with weakness in Memory,
Software, and South Korea despite the rise in KOSPI overnight. Cyclicals are
outpacing Defensives, including participation from Energy / Cmdtys names.
Europe's Stoxx 600 is coming off its best daily streak of gains since June and
more money managers say that this European equities rally could be
durable. In Asia, Japan’s Nikkei 225 rose 2% and the Kospi was flat, lagging a
6% surge for the small-cap Kosdaq as it benefits from a rotation out of
memory stocks and leveraged ETFs. Overnight, JPMorgan raised its year-end S&P
target to 8000 as the bank sees earnings delivering $365/shr this year and
$420/shr in FY27, +15% YoY. Bond yields are flat to +1bp as the yield curve
twists flatter; USD trading higher following consecutive weekly declines.
USDJPY rises 0.6% toward 159, surpassing last week’s intraday high and more
than erasing the drop we saw on Friday after the soft US jobs report prompted a
broad dollar selloff; about half of the post-intervention move has now been
erased. Commodities are led higher by Energy with MidEast headlines driving
direction; Brent trades at session highs, just under $85/bbl and the highest since
Aug 3, as Iran and Oman are still short of a final deal to reopen the Strait of
Hormuz while Iran ruled out direct talks with the US for now.
Tehran promoted a hard-line ex-commander as its top security
official. President Trump said the US was “semi-negotiating” with Iran. Israel
has rejected a proposal by US-backed mediators for disarming
Hamas. Houthis are targeting Saudi refineries after SA, Pakistan, and
Turkey signed a new defense pact. Both Base and precious metals are mixed with
silver the standout, rallying with the AI theme. There are no major econ
releases today as the market preps for CPI and Retail Sales, our Scenario
Analysis is included. With earnings season almost completed, we are seeing the
SPX trend towards 15% rev growth, 50% EPS growth, and almost 17% margins.
Fundamental
Headlines
The
Economy
The
US stats were disappointing last week---the second week in a row. They included
three negative primary indicators but no price measures. Overseas, the data was
balanced with one neutral inflation datapoint.
Two
weeks of lousy numbers (1) still don’t make a trend [though it is a start], (2)
don’t fit with narrative surrounding the AI spend and (3) could potentially be
explained by some weird aberration in how the economic stats have been
recorded. Such as this analysis by Wolf Richter:
Not
to belabor the point but here is some more analysis.
https://bonddad.blogspot.com/2026/08/july-jobs-report-schools-out-for-summer.html
And
this word of caution.
https://www.zerohedge.com/markets/houston-we-have-data-problem
Plus,
the initial Q3 nowcast points to increased economic activity.
https://www.capitalspectator.com/early-q3-gdp-nowcasts-point-to-a-pickup-in-economic-growth/
On
the other hand, the weekly economic index decelerates.
https://econbrowser.com/archives/2026/08/lewis-mertens-stock-wei-decelerates
Of
course, if the economy really is slowing, then that could take some pressure
off of rising prices and the Fed to raise interest rates (the bond market certainly
isn’t impressed)---‘could’ being the operative word.
However,
remember, a decent portion of current inflation is accounted for by
(1)
higher energy prices. The bulls**t coming out of
the White House notwithstanding, current developments in the Middle East do not
suggest [a] any kind of positive resolution to the US/Iran conflict and [b]
hence the return to the pre-war flow of oil through the Strait of Hormuz. Add
to that the destruction of the petroleum refining infrastructure in not only
the Middle East but also in Russia and I have a tough time seeing oil/oil
product prices meaningfully lower,
https://giftarticle.ft.com/giftarticle/actions/redeem/ae7f31e7-eb0c-46ba-9ffd-b010d746d7e9
(2)
and tariffs. True, the Donald could put an end to
this nonsense in a nanosecond. The question is, will he?
Add in a spendthrift ruling class
and my inflation outlook remains firmly in place.
That
being so and IF the economy is slowing, it raises the prospect of stagflation---though
probably not to the degree of the 1970’s variety. But so what? It is still not
an economic environment we want. That said, this is at the present just
speculation on my part. But it is an alternative scenario whose probability I soon
may have to start to evaluate.
Bottom
line: the prospect for a slowing in the rate of economic growth has appeared on
the horizon. Not near enough to warrant a change in my forecast but enough to be
a factor to consider. Meanwhile, inflation remains well above the Fed’s target.
The truth about inflation.
US
International
Other
Capitalism brings prosperity.
June consumer credit jumps more than expected.
https://www.zerohedge.com/economics/consumer-credit-jumps-more-expected-june-credit-card-debt-spikes
Iran
Overnight news.
Monetary
Policy
The fallacy in the ‘sound money gold standard’.
https://talkmarkets.com/article/sound-money-be-careful-what-you-wish-for-1786108712
Warsh is being
misread.
https://giftarticle.ft.com/giftarticle/actions/redeem/5266ee85-b947-4c1d-a5c3-a8aeb3d634c0
AI
The AI building boom is growing twice as fast
as the housing boom.
Investing
The risk/reward for rates tilts bearish.
Nobody wants protection.
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