Monday, August 3, 2015

Monday Morning Chartology

The Morning Call


The Market

            Last week, the Dow was unable to recover above (1) its 100 day moving average, re-setting it from support to resistance and (2) the lower boundary of its intermediate term uptrend, re-setting it to a trading range.  It also rebounded above the lower boundary of its short term uptrend, voiding the break, and then broke it again on Friday.  If it remains there through the close on Tuesday, the short term trend will re-set from up to a trading range.

            In the meantime, the S&P traded back above the lower boundary of its short term uptrend (negating the break) and its 100 day moving average (leaving it as support versus resistance).  Clearly the Averages are out of sync.  Their task is now to return to harmony.

            The TLT finished the week right on its 100 day moving average and a short hair from the upper boundary of its short term downtrend.  That pin action suggests that the economy may be weakening.

            GLD’s chart remains a mess.  It is now in downtrends in every imaginable timeframe.  There is likely a bottom here somewhere; but it would be foolish to try to pick it.

            The VIX is again near the bottom of a trading range that goes back to August 2014---a level that represents value as portfolio insurance.  The Aggressive Growth Portfolio will Buy a 2.5% trading position in VXX at the Market open, with a very short stop.

            Secular bull and bear markets (medium):


            Just to summarize last week’s events:

(1)   the economic data in volume was negative; primary indicators were balanced,

(2)   the Fed did another of its best impressions of a wimp [dovish],

(3)   Chinese investors frustrated the powers that be by taking their market down despite monetary injections,

(4)   the Greek bailout ran into a snag as the IMF support wobbled and Tsipras is contemplating whether or not to have yet another referendum on the Troika’s bail out terms.

In short, nothing to suggest an improved economic/geopolitical backdrop for stock prices.

            Hilsenrath on the Fed on a September rate hike (medium):

            ***overnight, the July Markit EU PMI came in above expectations but still below June’s reading; the July Chinese PMI was down, in negative territory, for the fifth month in a row; Chinese officials suspended trading by Citadel, a US hedge fund.



   This Week’s Data

            June personal income rose 0.4% versus expectations of up 0.3%; personal income was up 0.2%, in line.


            Freight rates from China to Europe down big (medium):



  International War Against Radical Islam

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