The Morning Call--AWaiting FOMC Minutes

Aug. 21, 2019 8:45 AM ETTROW
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Value, Growth At A Reasonable Price, Dividend Investing

Contributor Since 2010

Steve Cook received his education in investments from Harvard, where he earned an MBA, New York University, where he did post graduate work in economics and financial analysis and the CFA Institute, where he earned the Chartered Financial Analysts designation in 1973. His 46 years of investment experience includes institutional portfolio management at Scudder. Stevens and Clark and Bear Stearns, managing a risk arbitrage hedge fund and an investment banking boutique specializing in funding second stage private companies. Through his involvement with Investing for Survival and Seeking Alpha, Steve hopes that his experience can help other investors build their wealth while avoiding tough lessons that he learned the hard way.

The Morning Call


The Market


The Averages (22962, 2900) were off yesterday. Volume was down, as usual; breadth deteriorated. The Dow ended below its 100 DMA (now resistance), above its 200 DMA (now support) and above the upper boundary of a very short term downtrend for the second day, voiding that trend. The S&P ended back below its 100 DMA once again. This is the seventh time it has crossed this level in the last twelve trading days. Clearly, the recent see saw action is not over. So, I continue to withhold a support/resistance call. It finished above its 200 DMA (now support) but back below the upper boundary of a very short term downtrend, negating Monday’s break.

The VIX rose 3 5/8 ½ %, finishing above both MA’s (now support). However, it finished below the lower boundary of its very short term uptrend for a second day voiding that trend.

The long bond was up 1 %, remaining above both MA’s and in uptrends across all timeframes. It continues to be overextended.

The dollar fell ¼ %, ending in short and long term uptrends and above both MA’s. However, it bounced off its July 31st high, creating a minor resistance level..

Gold advance ¾ %, closing within very short term and short term uptrends and above both MA’s. However, it still has the gap up open from two weeks ago which needs to be closed. And like TLT, it remains overbought.

Bottom line: long term, the Averages are in uptrends across all timeframes; so, the assumption is that they will continue to advance. Short term, they failed to push through their 100 DMA and are now out of sync on the upper boundaries of their very short term downtrends. So, they remain in the congestion range dating back to August 5th.

The pin action in the long bond, the dollar and gold continues to point at the need for a safety trade.

Tuesday in the charts.



One minor US datapoint released yesterday: month to date retail chain store sales grow was less negative than last week.

Overseas, June EU construction output and July German PPI were disappointing while the August UK industrial orders index was down but less than expected.

Business cycle risk report.

Recession predictions.

Bottom line: the minutes of the last FOMC meeting will be released today. Investors’ take on that narrative could add to or temper what seems to be an increasingly schizophrenic Market/Fed relationship.

Expected Q3 and Q4 S&P earnings.

News on Stocks in Our Portfolios

T. Rowe Price (NASDAQ:TROW) declares $0.76/share quarterly dividend, in line with previous.


This Week’s Data


Month to date retail chain store sales grow rate declined but less than in the prior week.

Weekly mortgage applications fell 0.9% while purchase applications were off 4.0%.



Math challenged politicians.

Ground zero for the next recession.

What I am reading today

The search for Amelia Earhart’s airplane.

Exclusive: Inside the search for Amelia Earhart's airplane

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Disclosure: I am/we are long trow.

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