The Morning Call
The S&P has been consolidating since late July. It is now between its 100 DMA and 200 DMA and between the upper boundary of a developing very short term downtrend and the August 5th low which it has bounced off of twice. So, there are multiple levels that will provide directional information.
On a long term basis, TLT remains in uptrends across all timeframes and is above both MA’s. But shorter term, it has gotten overextended. Plus, it has two gap up opens that need be filled, neither of which would call into question the long bonds upward momentum. Barring a financial crisis, some backing and filling would not be surprising.
The dollar’s performance remains strong, ending above both MA’s and within short and long term uptrends. However, it has not gotten overextended like TLT and GLD. So, there is less technical pressure for a correction; although it still has a one gap up open that needs to be filled.
Despite being off slightly on Friday, GLD is also getting overextended; though like TLT, there is no sign of a decrease in GLD’s upward momentum. The only negative is all those gap up opens further down. But also, like TLT, barring a crisis of some sort, expect some short term loss of momentum. However, unlike TLT, GLD is nowhere near its all-time high.
The VIX followed the see saw Market last week. Note that it made a higher high and remained within a developing very short term uptrend---giving a slightly bias to the stock market
- Trump makes another concession to Chinese, giving Huawei an additional 90 days to buy US made supplies.
- Germany prepares stimulus in case of recession.
- Bank of China initiates interest rate reforms designed to lower lending rates.
News on Stocks in Our Portfolios
This Week’s Data
The July Japanese trade deficit was Y249.6 billion versus estimates of T200.0 billion.
July EU CPI was -0.5% versus forecasts of -0.4%.
The role of offshoring in the decline in manufacturing employment.
Mounting loan problems in the farm belt.
What I am reading today
Massive Black Hole ‘wakes up’
Comet plunges into the sun.
Quote of the day.
Soundness is not rate of return.