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The Morning Call--I Am Not Saying This Is A Blow Off Top.

Jul. 22, 2020 9:17 AM ET
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The Morning Call


The Market


The Averages (26840, 3257) closed up again on the day, though well off their intraday highs. The S&P continued its advance above its June high, indicating a likely challenge of its February all time high (3393). However, the Dow was still been able to fill its ‘island top’ on a closing basis much less pierce its June high. Until it does so, it could act as a drag on the S&P. The VIX turned in a mixed performance. On the one hand, it ended up on the day (unusual for an up stock day); on the other, it finished below its 200 DMA for a third day; a successful challenge would open the way to filling the February gap up open---support for the S&P. I am sticking with my assumption that the Market’s bias is to the upside.


Watch the VIX.




Gold was up 1 ¼%, making another new nine year high. The long bond was also up, keeping its upward momentum going. The dollar declined on big volume, ending below the lower boundary of its short term trading range for a second day (if it remains there through the close today, it will reset to a downtrend). All this suggests a weak economy.

Tuesday in the charts.




The Economy


Weekly mortgage applications rose 4.1%, purchase applications 1.8%.

The May housing price index was reported at -0.3% versus estimates of +0.4%.


The July Japanese flash manufacturing PMI was 42.6 versus consensus of 42.4; the services PMI was 45.2 versus 47.2; the composite PMI was 43.9 versus 46.4.


Hourly worker recovery in small businesses.


Or not.


Declining confidence in Trump’s economic stewardship.


May gasoline sales.


The coronavirus

***overnight, infections continue to rise.


Sunbelt states use third path to confront the coronavirus.


The Fed

Immaculate deception. Fed style.


ZIRP until something breaks.


Fiscal Policy

EU adopts groundbreaking stimulus package.


McConnell says no stimulus bill by end of next week.



US orders closure of Chinese consulate in Houston.


US blacklists 11 Chinese companies over Uighur forced labor.


Bottom line. in early June, I suggested that the Market was demonstrating a number of the characteristics of a blow off top. Not long after, the indices created those ‘island tops’, making it look like I had been prescient. But it was not so. However now the S&P is pushing towards its February high with many stocks exhibiting the kind of explosive price action in the face of serious economic problems that once again reminds me of a blow off top. I am probably wrong again; but, in my opinion, the Market is exhibiting unhealthy behavior. Invest accordingly.

Growth versus value.


Today’s most unpopular investment.


Mark Cuban warns.


News on Stocks in Our Portfolios

What I am reading today

How innovation works.


Innovation in America is under stress.


Quote of the day.


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