The Morning Call
1/24/20
The
Market
Technical
The Averages (29160,
3325) turned in another mixed day (Dow down slightly, S&P up slightly), though
they still closed above both MA’s and in uptrends across all timeframes. So,
the strong upside momentum continues. Volume was up; breadth weakened a bit
further, but prices remained in overbought territory. Remember that there are still multiple gap up
opens down below that ultimately need to be filled.
The VIX was up ½ %. Intraday, it tried to challenge its 100 DMA
(now resistance) but fell back. That move did little to improve the chart/suggest
that investor sentiment could be changing to the negative.
The long bond rose
¾ %, finishing above its 100 DMA for a second day (now resistance; if it
remains there through the close today, it will revert to support). Such a reversion would bring into question current
bond investor sentiment that the economy is growing stronger.
The dollar managed
a ¼% rally, but that did little to suggest any kind of change in trend. So, it appears that there is more
downside. That said, there is a huge gap
down open dating back to 12/23 that will at some point begin to exert a powerful
magnetic pull to the upside on UUP.
Gold was up ¼%,
closing within very short term and short term uptrends and above both MA’s.
The chart of the S&P
is clearly pointing at a stronger economy.
Those of GLD and UUP not so much; and TLT may also about to challenge
that scenario.
Thursday in the
charts.
Fundamental
Headlines
Yesterday’s
datapoints weighed to the negative. The December
leading economic indicators fell more than expected while the January Kansas
City Fed manufacturing index was negative but not as much as anticipated.
Overseas, the January
EU consumer confidence was than estimated.
Bottom line:
while the pin action of the last two days suggest that investors are taking a
snooze, the SAARS like virus discovered in China appears to be spreading which could
reach a point at which its impact on trade starts to register on investors.
In addition, we
are in the midst of earnings season. I
have great confidence that profit expectations have been fine-tuned enough that
the final tabulations will record a continuation of the positive trend in ‘beats’.
Lost in much of the daily narrative is the
fact that overall, corporate profits haven’t grown in five years---which speaks
to my ongoing concern about equity valuation.
I know, I know. NotQE still trumps fundamentals in the short term. And will continue to do so until it doesn’t.
Doom and gloomers.
Sell discipline.
News on Stocks in Our Portfolios
Economics
This Week’s Data
US
The
December leading economic indicators fell 0.3% versus consensus of -0.2%
The
January Kansas City Fed manufacturing index came in at -4 versus estimates of
-6.
International
January
EU consumer confidence was -8.1 versus forecasts of -7.8.
December
Japanese CPI came in at +0.1% versus estimates of +0.2%.
The
January Japanese flash manufacturing PMI was 49.3 versus consensus of 48.7; the
services PMI was 52.1 versus 49.8; the composite PMI was 51.1 versus 49.2.
The
January German flash manufacturing PMI was 45.2 versus 44.5, the services PMI was
54.2 versus 53.0 and the composite PMI was 51.1 versus 50.5.
The
January EU flash manufacturing PMI was 47.8 versus 46.8, the services PMI was
52.2 versus 52.8 and the composite PMI 50.9 versus 51.2
The
January UK flash manufacturing PMI was 49.8 versus 48.9, the services PMI was
52.9 versus 51.0, the composite PMI as 52.4 versus 50.6.
Other
LA
port traffic down year over year.
The
Fed and inflation.
Joke
of the day: Jamie Dimon on socialism.
What
I am reading today
The problem with the 4% retirement
income rule
The stay rich portfolio.
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