Investing for Survival: breadth

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Wednesday, May 4, 2022

The Morning Call---Horrible breadth suggests that the Marker is oversold.

The Morning Call

5/4/22

The Market

Technical

Tuesday in the charts

https://www.zerohedge.com/markets/bonds-stocks-bid-ahead-fed-natgas-soars-2008-highs

Note: the S&P closed below the lower boundary of its short term trading range (and the 23.6% Fibonacci retracement level) for the third day. That signals a reset to a short term downtrend---which I am doing. However, the weakness of the follow through from the first day of the challenge suggests that this could be a false flag. And as you can read below, breadth is so oversold that a bounce seems likely. The point being: do not be surprised if this break is quickly negated.

Horrible breadth suggests that the Market is oversold.

https://www.zerohedge.com/the-market-ear/cfvvaefpnq

Another excellent piece from the Northman Trader (must read).

https://www.zerohedge.com/markets/unthinkable-0

Counterpoint---sort of.

https://www.zerohedge.com/personal-finance/passive-behemoths-have-yet-awaken

Fundamental

Headlines

The Economy

Weekly mortgage applications increased 2.5% while purchase applications were up 4.1%.

Month to date retail chain store sales grew much faster than in the prior week.

The March job openings report (JOLTS) showed total openings of 11.5 million versus predictions of 11.0 million.

March factory orders rose 2.2% versus estimates of +1.1%; ex transportation, they were up 2.5% versus +0.9%.

The April ADP private payrolls report pointed out job increases of 247,000 versus expectations of 395,000.

https://www.zerohedge.com/markets/adp-signals-weakest-job-gains-april-covid-lockdowns

International

The March German trade balance was +E9.7 billion versus forecasts of +E9.5 billion; the final April services PMI was 57.6 versus 57.5.

March EU retail sales fell 0.4% versus consensus of -0.1%; the April final services PMI was 57.7, in line.

Other

The ‘strong’ dollar is a relative thing.

https://www.realclearmarkets.com/articles/2022/05/03/the_dollar_is_mighty_in_the_way_that_kim_jong_un_is_tall_829849.html

Median household income in March.

https://politicalcalculations.blogspot.com/2022/05/median-household-income-in-march-2022.html#.YnFfjOjMKUk

Update on some business cycle indicators.

https://econbrowser.com/archives/2022/05/monthly-gdp-and-other-business-cycle-indicators

The era of ‘cheap and plenty’ may be over.

https://www.nytimes.com/2022/05/03/business/economy/pandemic-supply-chains-inflation.html

The Fed

The Bank of England is expected to raise rates to 13 year high this week.

https://www.bloomberg.com/news/articles/2022-05-03/bank-of-england-poised-to-boost-interest-rates-to-13-year-high?srnd=economics-vp&sref=loFkkPMQ

Inflation

The hot housing market makes the Fed’s job tougher,

https://www.bloomberg.com/news/articles/2022-05-03/housing-market-prices-rise-worsen-inflation-dilemma?srnd=premium&sref=loFkkPMQ

Speaking of which, housing prices were up 20% YoY in March.

https://www.calculatedriskblog.com/2022/05/corelogic-house-prices-up-record-209.html

And rents were not any better.

https://www.calculatedriskblog.com/2022/05/rent-increases-up-sharply-year-over.html

Geopolitics

An interesting background discussion about the Ukraine/Russia conflict. It is a bit too conspiratorial for me but a lot of the points mesh with what we already know.

https://www.nakedcapitalism.com/2022/05/michael-hudson-talks-with-katie-halper-and-aaron-mate-about-the-broader-ramifications-of-the-us-nato-conflict-with-russia.html

Bottom line

This does not comport with the Earnings Tracker evidence that I linked to yesterday. Let’s see who is right.

https://www.linkedin.com/feed/hashtag/?keywords=stockmarket

Thoughts on the Market; the scale versus the casino.

https://alephblog.com/2022/04/28/the-scale-versus-the-casino/

The familiarity bias.

https://www.evidenceinvestor.com/beware-the-lure-of-the-familiar/

The inevitable end of bad advice.

https://www.zerohedge.com/markets/dont-be-bearish-inevitable-end-bad-advice

News on Stocks in Our Portfolios

What I am reading today

Optimism about the threat of nuclear war.

https://marginalrevolution.com/marginalrevolution/2022/05/optimism-about-the-threat-of-nuclear-war.html

Big government cheese.

https://www.adamsmith.org/blog/the-big-government-cheese

Visit Investing for Survival’s website (http://investingforsurvival.com/home) to learn more about our Investment Strategy, Prices Disciplines and Subscriber Service.

Monday, April 18, 2022

Monday Morning Chartology

The Morning Call

4/18/22

The Market

Technical

After a second gap down open on Monday, the S&P churned last week. However, it (1) successfully challenged its 200 DMA, resetting it to resistance and (2) remained in a very short term downtrend off its 3/29 high. I am not suggesting disaster lies ahead; after all, it is still a long way from the lower boundary of its short term trading range and any Fibonacci retracement levels. But currently the momentum is down.

Goldman sells billions in stock.

https://www.zerohedge.com/markets/goldman-quietly-sells-billions-stocks-third-quarter-row

The long Treasury continued its rout. I noted last week that the lower boundaries of its short term downtrend and intermediate term uptrend should offer support and that, at least, some backing and filling seemed likely. Nope. It blew through both like s**t through a goose. Clearly, the bond guys aren’t buying the ‘peak inflation’ thesis being currently pushed by some opinion leaders. As always, my bet is with the bond guys. That said, given the hefty distance between TLT’s current price and the lower boundaries of both its newly reset intermediate term trading and its long term uptrend, prices could go a good deal lower without totally breaking down.

Gold had another good week though I am not sure if it was because its investors were, like the bond guys, shrugging of the ‘peak inflation’ happy talk from the stock crowd or because they believe it and assume that any Fed tightening will be short lived. Whatever the thinking, longer term, GLD is in uptrends across all timeframes and above both DMAs. So, until something breaks, the assumption is that the long term trend remains to the upside.

Nothing has changed. The dollar’s chart continues to be the healthiest of the lot. My assumption remains that irrespective of what happens, investors continue to believe that the dollar is a safe place to be.

Friday in the charts.

https://www.zerohedge.com/markets/its-shitshow-illiquidity-everywhere-market-mayhem-strikes-ahead-long-weekend

More breadth.

https://www.zerohedge.com/the-market-ear/ckdeeygsfi

Individual investor sentiment the lowest since 1992.

https://www.bespokepremium.com/interactive/posts/think-big-blog/bespokes-morning-lineup-4-14-22-whoa

So, is the pain trade higher?

https://www.zerohedge.com/the-market-ear/c5xvyurssi

The growth in corporate profits versus the growth in wages.

https://www.zerohedge.com/markets/yes-it-different-time

Fundamental

Headlines

The Economy

Review of last Week

Last week the economic data were sparse and mixed with one primary indicator positive and two mixed. Overseas stats were also mixed.

So, the numbers, what there was of them, continued to validate my outlook: the economy is struggling to grow (but no recession), hampered by irresponsible monetary and fiscal policies, getting no support from the global economy and threatened by (1) inflationary forces and (2) continued supply chain disruptions because of the conflict in Ukraine.

The preliminary April consumer sentiment came in at 65.7 versus estimates of 59.0.

https://www.advisorperspectives.com/dshort/updates/2022/04/14/michigan-consumer-sentiment-jumped-in-april

International

Q1 Chinese GDP growth was +1.3% versus forecasts of +0.6%; YoY industrial production was +5.0% versus +4.5%; YoY retail sales were -3.5% versus -1.6%; YoY fixed asset investments were +9.3% versus +8.5%.

https://www.zerohedge.com/markets/china-q1-gdp-comes-stronger-expected-march-data-stumbles-amid-covid-lockdowns

Other

Small businesses are not that optimistic

https://www.linkedin.com/in/edward-yardeni/recent-activity/

Higher rates starting to impact housing.

https://finance.yahoo.com/news/economic-shock-hitting-housing-market-075627914.html

The EU takes another self-destructive step.

https://www.zerohedge.com/commodities/oil-surges-session-highs-after-report-eu-drafting-ban-russian-crude

The Fed

How important to the US is the Bank of Japan’s monetary policy?

https://www.russell-clark.com/p/why-is-japan-so-important?s=r

What does a successful Fed policy look like?

https://www.themoneyillusion.com/what-does-successful-fed-policy-look-like/

The Fed’s new policy is disengaging its prior volatility suppression policy.

https://www.zerohedge.com/markets/fed-just-disengaged-its-volatility-suppression-machine

Fiscal Policy

A deeper look into the recent federal budget numbers.

https://scottgrannis.blogspot.com/2022/04/tax-revenues-soar-spending-still-in-la.html

Inflation

Dissecting PPI.

https://econbrowser.com/archives/2022/04/will-the-true-ppi-stand-up

Recession

From Larry Summers on the probability of recession.

https://www.nakedcapitalism.com/2022/04/overheating-conditions-indicate-high-probability-of-a-us-recession.html

Bottom line

Risk/reward in a Fed rate hiking cycle.

https://mailchi.mp/verdadcap/risk-reward-in-a-hiking-cycle?e=6a3b6a5c9b

On concentrated positions.

https://alephblog.com/2022/04/12/on-concentrated-positions/

News on Stocks in Our Portfolios

What I am reading today

Visit Investing for Survival’s website (http://investingforsurvival.com/home) to learn more about our Investment Strategy, Prices Disciplines and Subscriber Service.

Wednesday, November 2, 2022

The Morning Call---Inflation isn't going away soon.

Wednesday, May 4, 2022

The Morning Call---Horrible breadth suggests that the Marker is oversold.

Monday, April 18, 2022

Monday Morning Chartology

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