Greetings from Château des Fines Roches.
We have made our way from Paris down through the Alps to Provence. As this is being written dusk is creeping across the vineyards surrounding Chateauneuf du Pape, as we are finishing off a wonderful dinner overlooking a valley filled with vineyards, which produce world famous wines. The nearby village of Tavel promotes itself as producing the “Premier Rose de France”, and for those of you, which know your wine, any vintage of a Chateauneuf du Pape is desirable. There are many reasons France is the most visited country in the world!
Americans, which have never traveled in Europe, are often surprised by what they find.
Paris is obviously a one of a kind city with very large open spaces in the old section of the huge metropolis. One can walk out of the Louvre, and then look down the Champs Elysees and see the L’Arc de Triomphe far in the distance, or walk over to the beautiful Jardin de Tuileries, which covers many acres. The Opera House, Napoleon’s Tomb, The Galleries Lafayette, and for those of you in good physical shape the Eiffel Tower are all in walking distance, as are other museums and notable venues along the river. However, for Notre Dame I would recommend taking a taxi. On the day we visited there was lots of heavy equipment and construction crews attempting to stabilize the stone walls, which are still standing, but in various stages of damage after the intense fire consumed the roof, which collapsed into the interior. Money for the restoration is pouring in, but realistically it will likely take years, if not decades for a complete restoration of the church.
Folks taking a stroll along the narrow streets just off the Avenue de Rivoli may feel as if they have strayed into a bad section of town, until they walk through the door of one of the salons, copious in number in the area around the Louvre. Once inside the salons turn into marble palaces hosting names like Chanel, or other haute fashion brands. This phenomenon happens all across France, and other European cities, given the long history of the region, as large cities grew up around the original ox cart roads, often ancient Roman roads. The exterior of the weathered stone buildings often look tired and run down, an appearance accentuated by the very narrow streets.
For example, last year we arrived in the French town of Annecy, and followed the GPS to our B&B, which Paige had researched carefully in advance. As we arrived at the GPS destination I began to wonder, if the internet had handed us some “fake news” about our B&B. The picture above was taken from the street, as I waited double parked for Paige to try and locate an entrance, and our host to direct us to our private parking, a necessity if you rent a car in France. Our apartment, hidden behind the rusty metal gate pictured above, turned out to have been the home of the area’s Roman Governor centuries ago, and is now an elegantly restored multi-floor B&B complete with the Governor’s huge wine cellar, which is still in use. And, a couple blocks away the area turned into a gorgeous and walkable historic area with a river running through it, flowing from the lake with large promenades several blocks away. The old cliché “don’t judge a book by its cover” comes to mind. Even seasoned travelers can be surprised by what they find as they ramble off the tourist paths in France.
So what does any of this have to do with the stock market? Well for those of us, which have been following the markets for a few decades, the phrase “the experts were surprised” comes to mind. While we have been in France there has been an article in the financial media by an “expert” forecasting a soon to be complete meltdown of the stock market, and another article by another “expert” calling for a run-away bull market. The authors of these articles have been quoted in the financial media over the years. It appears inevitable that one, or both, of these fellows may be “surprised” at some point by what actually happens going forward. Me, I want my wife to be pleasantly surprised by once again finding a jewel of a destination off the beaten path in France, but Alexander and I are always working diligently to prevent our clients from being exposed to costly market surprises.
As the S&P-500 approaches the round number of 3000, the rally may encounter some resistance, as round numbers tend to become psychological barriers, which often take multiple attempts to penetrate. The financial media may make much ado about this next milestone, so over the days and weeks to come we will be briefing client’s only about the balance of supply and demand for stocks, and not the news, or some prediction du jour by the “experts”, which are often surprised!
CLIENT AND RESEARCH CUSTOMER UPDATE FOR THE WEEK ENDING July 5, 2019
These weekly updates have been making the case that the balance of supply and demand remains favorable, and last week’s update stated that any positive catalyst would likely result in the popular stock indexes touching new all-time highs. New all-time highs were touched during this past week’s holiday shortened trading. Given that the balance of supply and demand continues to remain favorable, the potential for additional new all-time highs, perhaps after several attempts to break through the psychological barrier of S&P-500 3000, would appear to be a likely probability. However, clients would do well to remember that markets tend to move in fits and jerks as opposed to in straight lines.
TATY — A REPRESENATIVE OF A FAMILY OF STRATEGIC SUPPLY AND DEMAND INDICATORS
TATY, shown in the chart above in red and blue candle chart format, finished the week at a strong 152, which helped diminish the negative divergence, shown by the orange down sloping line, of the prior two weeks, but the negative divergence remains. Only a TATY bottom in, or near, the red zone surrounding the 140 level will assuage my lingering concern about this negative divergence with the rising price. However, new all-time highs are new all-time highs, so for now we will just monitor the divergence, as concern is not the same as being compelled to take action, given that the objective measures of supply and demand remain favorable.
SAMMY — A REPRESENATIVE OF A TACTICAL FAMILY OF SUPPLY AND DEMAND INDICATORS
SAMMY, shown above and below, alone and with the SPXL 3X ETF overlaid, did not issue any new buy signals this week, as the stock market continued to touch new all-time highs. The new highs reaffirmed the previous two buy signals issued in May. So for now we simply hold our core positions, and the recently added May purchase and let the market work for us.
THE BOTTOM LINE
The balance of supply and demand remains favorable, and both our core positions, and our recently added position purchased in May continue to touch new all-time highs. Until the balance becomes more of a concern, we will hold all our longs, and let the market work for us.
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Gregory H. Adams