The Morning Call
4/30/18
The
Market
Technical
I
don’t think that the battle lines between the S&P bull and bears could be
much clearer. The upper boundary is the
upper boundary of a very short term downtrend; the lower boundary is the 200
day moving average. At this moment, in
my opinion, nothing else on this chart matters.
This standoff is going to get broken and, historically speaking, the
direction of the break will determine the direction of the S&P until it
hits either its all- time high on the upside or the lower boundary of its short
term uptrend on the downside.
After
a vicious two week sell off in which TLT challenged the lower boundary of its
long term uptrend, it rallied hard Thursday and Friday pushing back above the
long term trend line. Short term that
leaves intact the long term trend to lower interest rates. Still TLT faces a lot of overhead resistance (to
lower interest rates) in the form of both moving averages and a short term
downtrend.
The
dollar rallied hard last week. It has
now reset its intermediate term trend from down to a trading range and it 100
day moving average from resistance to support.
UUP ended above its 200 day moving average for the second day; if it
remains there through the close tomorrow, it will revert to support. This week’s pin action viz a viz TLT is not
typical (i.e. if TLT is rallying, UUP should be falling). On the other hand, the dollar was very docile
during a big part of TLT prior decline; so maybe there is some kind of delayed
response. Color me confused.
After
declining enough to reset its short term trend from up to a trading range, GLD
is trying to hold above its 100 day moving average. It was not a surprise that gold traded lower
when TLT made that big move down (higher rates generally mean lower GLD
prices). So it is also not a surprise
that gold has gained some traction as the long bond rallied. That said, I didn’t think that the selloff in
GLD matched the intensity of the TLT’s decline; and perhaps that was because the
fear of inflation (a plus for gold) is growing in investors’ minds.
The
VIX is in a two week struggle to remain above its 100 day moving average. Since a rising VIX implies greater volatility
and lower stock prices, the good news is that it is again challenging the MA;
if it remains there through the close tomorrow, it will revert to
resistance. The bad news is that the MA
is rising, so if the VIX stays above it, volatility and lower stock prices will
remain in our future.
Fundamental
Headlines
News on Stocks in Our Portfolios
Paychex (NASDAQ:PAYX) declares $0.56/share quarterly dividend, 12% increase, from
prior dividend of $0.50.
Economics
This Week’s Data
US
March
personal income rose 0.3% versus estimates of +0.4%; personal spending was up
0.4%, in line; the PCE price deflator was flat versus forecasts of up 0.1%.
International
The
April Chinese manufacturing PMI was 51.4 versus expectations of 51.3; the
services PMI was 54.8 versus 54.5; and the composite PMI was 54.1 versus the
March reading of 54.0.
Other
Increasing
concerns that the central banks don’t have an exit strategy (medium):
What
I am reading today
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