Showing posts with label healthcare. Show all posts
Showing posts with label healthcare. Show all posts

Friday, May 24, 2019

The Morning Call--How quickly will Trump try to rescue the Market?


The Morning Call

5/24/19

The Market
         
    Technical

The Averages (25490, 2822) had volatile day, closing down but well off their intraday lows.  Volume was up slightly but still low; breadth was negative.  However, there was only marginal damage to what are otherwise strong charts (1) the Dow challenged both MA’s, but regained its 100 DMA and closed only very slightly below its 200 DMA [now support; if it remains there through the close next Tuesday, it will revert to resistance].  The S&P finished above both its DMA’s,  (2) neither made a lower low, (3) both had gap down opens which now need to be filled and (4) the S&P’s 100 DMA has crossed above its 200 DMA---a technical plus.

As I noted in yesterday’s Morning Call, I am watching whether the indices make a lower low after having made a lower high---which they have not done  At the moment, my assumption is that the indices will challenge their all-time highs---but with lower conviction.  If the indices follow through to the downside and make a lower low, then it would negate that assumption and raise the odds that a double top has been made---a technical minus.

The VIX spiked 14 ½ %, bouncing off the lower boundary of its very short term uptrend and ending above its 100 DMA (now resistance; it if remains there through the close next Monday, it will revert to support) and right on its 200 DMA (now resistance).  All exactly the opposite of what I expected at the close on Wednesday.

The long bond was up over 1%, finishing above both MA’s, in a very short term uptrend and at another two year high.  The next resistance level is its all-time high.

             The dollar started strong, trading within nine cents of a ten year high but then backed off.  Technically speaking, it suggests the (1) the strong resistance of that ten year high and (2) the magnetic draw of those two unfilled gap up opens below current price levels.
           
            GLD was up ¾ %.  Its chart remains broken---its 100 DMA remains resistance; plus, it still hasn’t fulfilled the downside objective set by that recent head and shoulders formation.
                        https://reason.com/video/stossel-money-money-money/

Bottom line: while it looked intraday that the Averages were going to make a new lower low, they didn’t.  So, a challenge of their all-time highs remains a possibility; but if they follow through to the downside and make a new lower low, that will raise the prospect that a double top has been made.

One day does not a trend make, but yesterday’s pin action in UUP, TLT and GLD points to a weaker economy.

            Thursday in the charts.

            A naysayer on technical analysis.

            Oil in for a bumpy ride.

    Fundamental

       Headlines

Yesterday’s stats were pretty dismal: April new home sales,  the May flash manufacturing, services and composite PMI’s were below estimates as was the May Kansas City Fed manufacturing index.  The one upbeat number was weekly jobless claims.

Overseas, the May Japanese flash manufacturing PMI along with the May EU flash manufacturing, services and composite PMI’s were less than forecast.  Q1 German GDP grew in line.

            The only headlines were on trade---the Chinese said that a meeting next month between Trump and Xi unlikely.

            From Thomas Friedman: China deserves Trump.

            ***overnight, Microsoft cuts ties with Huawei

            Chinese threaten UK over anti-Huawei moves.

            Bottom line: I posed the question in yesterday’s Morning Call: when if ever will investors start to discount that there will be no trade deal in the near future.  Was yesterday’s pin action that it may be happening now?  This author thinks so.

            If so, my second question comes into play: ‘how long will it take Trump and/or the Fed to react?’
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                 I will continue to take advantage of current lofty valuations to Sell Half of any stock in our Portfolios that trades into its Sell Half Range.


    News on Stocks in Our Portfolios
 
Medtronic (NYSE:MDT): Q4 Non-GAAP EPS of $1.54 beats by $0.07; GAAP EPS of $0.87 misses by $0.28.
Revenue of $8.15B (+0.1 Y/Y) beats by $30M.

Hormel Foods (NYSE:HRL): Q2 Non-GAAP EPS of $0.46 beats by $0.01; GAAP EPS of $0.52 beats by $0.06.
Revenue of $2.34B (+0.4% Y/Y) misses by $30M.

Home Depot (NYSE:HD) declares $1.36/share quarterly dividend, in line with previous.

Brown-Forman (NYSE:BF.B) declares $0.166/share quarterly dividend, in line with previous.

BlackRock (NYSE:BLK) declares $3.30/share quarterly dividend, in line with previous.

Economics

   This Week’s Data

      US

April new home sales fell 6.9% versus expectations of -2.8%.

The May flash manufacturing PMI came in at 50.6 versus estimates of 52.5, the services PMI was 50.9 versus 53.2 and the composite was 50.9 versus 52.

The May Kansas City Fed manufacturing index was reported at 4 versus March’s reading of 10.

April durable goods orders fell 2.1% versus consensus of -2.0%; ex transportation, they were flat versus +0.2%.

     International

            The March Japanese all industry activity index was -0.4% versus expectations of -0.2%; the April year of year core inflation rate was +0.9%, in line.
           
April UK retail sales were unchanged versus estimates of -0.3%.

    Other

            The truth about negative interest rates.

            Speaking of which, and I wish that I weren’t, another great article on the misallocation of assets resulting from Fed policy (must read):

            May steps down.

What I am reading today
                   
            Global warming; it can do anything.

                Trump plans executive order to help lower health care costs.

            One simple rule in saving for retirement.

            Quote of the day.

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




Wednesday, March 13, 2019

The Morning Call---Back to S&P 2800


The Morning Call

3/13/19

The Market
         
    Technical

The Averages (DJIA 25554, S&P 2791) had a mixed performance yesterday (Dow down---largely as a result of the ongoing problem with Boeing---,S&P up).  I am now watching the trading range defined by S&P 2800 (upper boundary) and its 200 DMA (lower boundary).

Volume was flat; breadth remained mixed.

The VIX declined 3 ½ %, ending within a trading range marked by its 200 DMA (upper boundary) and the late February/early March double bottom (lower boundary).

The long bond was up ¾ %, finishing just below a triple top and in a trading range bounded by that top and a double bottom at a support level.

The dollar dropped five cents, but still finished above the upper boundary of the November to present trading range and set a very short term uptrend.  Importantly, in doing so, it closed last Thursday’s gap open.

GLD rose 5/8%, continuing its rebound off a minor support level (now a double bottom) and above both MA’s.

Bottom line: the S&P as well as the VIX, TLT and GLD are now caught between strong support and resistance levels.  That suggests to me that there will be sideways trading across these markets over the near term.  Meanwhile, the dollar is in a solid uptrend off its January 2018 low; so, currency investors appear less uncertain.

            The bull market actually isn’t ten years old.

            Tuesday in the charts.

    Fundamental

       Headlines

            Yesterday’s stats weighed to the downside: the February small business optimism index and month to date retail chain store sales were disappointing while February CPI was in line; but ex food and energy, it was slightly below estimates.  Nothing overseas.
      
            Bottom line: it was a very slow day for economic or any other development.  I have nothing to add to prior comments.

            Latest on US/China trade negotiations.

More on first quarter economic growth.  I hope that the analyst will be as diligent in pointing out the flaws in forecasts of democratic administrations.

            Latest from Jeff Gundlach.
           
            Latest from Jeremy Grantham.

    News on Stocks in Our Portfolios
 
Economics

   This Week’s Data

      US

            Month to date retail chain store sales continued to slow.

            Weekly mortgage applications rose 2.3% while purchase applications were up 4.0%.

            January durable goods orders were +0.4% versus estimates of -0.5%; however, ex transportation, they were -0.1% versus forecasts of +0.1%.

            February PPI increased 0.1% versus consensus of +0.2%.

     International
                 
                  January Japanese machinery orders fell 2.9% versus expectations of -2.3%.

                  February Japanese PPI was up 0.2% versus projections of up 0.1%.

                  January EU industrial production declined 1.1% versus estimates of down 2.1%.

    Other

            China scrambles to deal with $6 trillion in debt.

            Parliament rejects May’s latest Brexit deal.

What I am reading today

            The easy way to make kids smarter.

            The internal dialogue of plants.

            Finland government collapses over inability to fund universal healthcare.

            Quote of the day.
           
            What to do when you realize that you have made a mistake.

            A new map of dark matter spanning ten million galaxies.


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




Tuesday, May 15, 2018

The Morning Call--My biggest question


The Morning Call

5/15/18

The Market
         
    Technical

The Averages (DJIA 24899, S&P 2730) got off to a great start yesterday, then gradually gave much of it back throughout the day.  Breadth continued to improve; volume was up.   The S&P ended above its 100 day moving average for a third day, reverting to support; the Dow finished right on its 100 day moving average.  Both remained above their 200 day moving averages.  The DJIA closed in a short term trading range but in intermediate and long term uptrends.  The S&P is in uptrends across all timeframes. 

With the S&P moving above their 100 day moving averages, the last piece of resistance is the Dow’s 100 day moving average; though it seems highly likely that challenge will be successful.  That done, the short term technical outlook will be positive with an objective of their former all-time highs.    Longer term, the assumption is that equity prices will continue to rise.
               
                The VIX was up 2 ¼ %, but remained below its 100 day moving average (now resistance) as well as its 200 day moving average for the fourth day, reverting to resistance.  It also finished below the lower boundary of its short term trading range for the third day, resetting to a downtrend. Clearly, the VIX is trading in line with a surging Market.

The long Treasury fell ½ %, falling back from a minor resistance level.  It seems that the weight of its 100 and 200 day moving averages and its short term downtrend are impacting it.  It now appears that another challenge of its long term uptrend is in the offing.

The three month Treasury now yields more than stocks (short):

The dollar was up fractionally, finishing close to the upper boundary of its newly reset intermediate term trading range and above its 100 and 200 day moving averages (now support).

            Plus rising dollar = tighter monetary policy (medium):

GLD continued to decline, falling back from its 100 day moving average (now resistance) but above its 200 day moving average (now support) and in a newly reset short term trading range.
               
Bottom line: once the Averages clear their 100 day moving averages (and we are now half way there)  the next visible resistance level is their former all-time highs.  I see no reason why those levels won’t be tested.

The other indicators that I follow aren’t breaking resistance (support) levels.  TLT backed off the lower boundary of its long term uptrend, the dollar felled back from the upper boundary of its intermediate term trading range.  That continues to point to a narrative that includes an improving economy but with little inflationary pressure.  Goldilocks.

    Fundamental

       Headlines
                       
                No economic data releases yesterday, either here or abroad.

                The news item of the day was Trump seemingly backing off the sanctions imposed on Chinese electronics firm (ZTE Electronics).  The pundits spent most of the day trying to figure out Trump’s motive.  Here is one from a (progressive/liberal) skeptic (medium):

                     Wilbur Ross on the subject (short):
                              
                   The other subject of debate was Trump’s new drug plan.

                    The cons of Trump’s drug plan (medium):

            The pros of Trump’s drug plan (medium):

Bottom line: free trade is good for the economy and ultimately good for the Markets.  Trump may not be going at it in a conventional manner; but nothing he does is conventional.  If he can achieve a freer and fairer trade regime, that is a plus.

Rationalizing our healthcare system to make it less expensive, absent bureaucratic oppression, is also good for the economy.   To be sure, virtually every piece of legislation foisted on the American electorate attempting to cut healthcare costs has ended up doing just the opposite.  So it is way too soon to assume Trump’s effort will turn out any different.  But if he is successful, it would be a positive.

                The question I try to answer every day is whether deregulation and the potential benefits from a revised trade regime and now perhaps improvement in the administration of our healthcare system are enough to offset the ill effects of an outsized national debt/deficit and an irresponsible Fed?  The answer is that there is almost surely some, but I don’t know by how much.  In my opinion, it is the biggest question with regards to the long term secular growth rate of the economy.

            Thoughts on valuation (medium):

            More (medium):

            And still more (short):

            Thoughts on bank debt (short):

    News on Stocks in Our Portfolios
 
Home Depot (NYSE:HD): Q1 EPS of $2.08 beats by $0.02.
Revenue of $24.95B (+4.4% Y/Y) misses by $270M.

Economics

   This Week’s Data

      US

            April retail sales rose 0.3%, in line; ex autos, they were up 0.3% versus expectations of +0.5%.

            The May NY Fed manufacturing index came in at 20.1 versus estimates of 15.5.

     International

            First quarter German GDP was up 0.3% versus forecasts of up 0.4%.

            April Chinese industrial production rose 7.0% versus consensus of up 6.4%; retail sales were +9.4% versus projections of 10.0%; fixed investment was up 7.0% versus expectations of up 7.4%.

    Other

            Cryptocurrencies and central banks (medium):

                Cleveland Fed head says may be going to 3% soon (short):

                St Louis Fed had worried about the yield curve inverting (medium):

                China makes hay on Trump’s Iran action (medium):


What I am reading today

            Quote of the day (short):

            Thoughts from a professional investor (medium):

            Following five healthy life style habits could add a decade to your life (medium):


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




Wednesday, February 7, 2018

The Morning Call--Follow through---in which direction?

The Morning Call

2/7/18
The Market
         
    Technical

The indices (DJIA 24912, S&P 2495) staged a big recovery yesterday.  Intraday, both of the Averages touched and bounced off their 100 day moving averages and the lower boundaries of their very short term uptrends.  So all trends remain intact.  That said, this kind of dramatic oversold bounce is not unusual in the midst of a Market waterfall formation. Volume rose; and breadth improved. While it may be too soon to pronounce that the worst is over, the technical assumption remains that stocks are going higher. 

The VIX fell 20%, but still closed above the upper boundary of its short term trading range for a third day, resetting to an uptrend---not a good sign for the bulls. 

The long Treasury declined on big volume.  It remains in a very short term downtrend, a short term downtrend and well below its 100 and 200 day moving averages. It continues in a technical no man’s land---but just barely.  The only remaining support level is the lower boundary of its long term uptrend.

The dollar was up five cents, but did little to improve an otherwise sick chart.
           
GLD dropped 1%, falling out of a very short term trading range.  Like TLT, investors felt comfortable selling a ‘safety trade’.

Bottom line: OK, so stocks have set a very short term low.    What I am focused on now is the extent of the rally; that is, will the indices reach their former highs and take them out or not. If they do, the momentum will remain to the upside, the current stomach churning sell off notwithstanding.  If not, then will any subsequent decline take out Monday’s low?  The results should give us an idea of whether we are in the midst of a hiccup (which was long overdue) or a reversion to a valuation mean.

    Fundamental

       Headlines
      
            Yesterday’s economic data was downbeat---the January trade deficit and month to date retail store sales were both disappointing.

The ruling class continues to jerk itself off.  Yesterday, the house passed its version of a continuing resolution; but to insure the senate dems remained pissed off, Trump says that he is ready to shut down the government over immigration (short):

Bottom line: the Market pin action remained the center of attention yesterday, as everyone breathed a sigh of relief.  If volatility moves lower, investor focus will likely return to earnings reports, the economic data and the clown show going on in Washington.

The net effect of the recent price decline did little to alter the overvaluation of stocks.  So my strategy remains unchanged: own enough cash to sleep well if the Market drops 30-50%.

            Don’t bank on strong earnings growth to sustain this market (medium):

            Counterpoint:

            More good advice (medium):

Economics

   This Week’s Data

      US

            Month to date retail chain store sales grew less rapidly than in the prior week.
           
            Weekly mortgage applications rose 0.7% while purchase applications were flat.

     International

    Other

            Paying the price for the Fed’s experiment (medium):

            The Fed’s QE unwind accelerates (medium):

What I am reading today

            A skeptical look at the Buffett/Bezos/Dimon proposal for healthcare reform (a bit long):

            New technology uncovers Mayan megalopolis (medium):

                In investing, simple is better (short):
  

Boeing’s new hypersonic aircraft (medium):

                The latest out of Syria (medium):

                Update on student loans [defaults] (medium):


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