The Morning Call
9/24/15
The
Market
Technical
The indices
(DJIA 16279, S&P 1938) inched lower yesterday. The Dow ended [a] below its 100 and 200 day
moving averages, both of which represent resistance, [b] in a short term
downtrend {16966-17885}, [c] in an intermediate term trading range
{15842-18295}and [d] in a long term uptrend {5369-19175}.
The S&P finished
[a] below its 100 and 200 day moving averages, both of which represent
resistance, [b] below the upper boundary of a very short term downtrend, [c] in
a short term downtrend {2008-2072}, [d] within an intermediate term uptrend
{1918-2111} and [e] a long term uptrend {797-2145}.
Volume rose;
breadth was mixed, though the flow of funds indicator made a new low. The VIX
(22.1) fell slightly, remaining [a] above its 100 day moving average, now
support, [b] back below the lower boundary of its a short term uptrend, if it
stays below this boundary though the close on Friday, it will re-set to a
trading range, [c] within an intermediate term trading range {it remains well
above the upper boundary of its former intermediate term downtrend} and [d] a
long term trading range. Finally, it finished
above the top of the zone (20) indicative of more stable stock prices.
The long
Treasury declined, but closed above its 100 day moving average, still support;
and it ended within short and intermediate term trading ranges.
Counterpoint
(short):
GLD declined,
closing in downtrends across all timeframes and below its 100 day moving
average. It can still build a bottom
were it to fail to successfully challenge its July/August lows (104). But that is yet to be seen.
Oil was down 3%,
staying below its 100 day moving average and within a short term trading range
and intermediate and long term downtrends.
The dollar was unchanged. It remained right on its 100 day moving
average, which is now resistance, and within short and intermediate term
trading ranges.
Bottom line: yesterday
stocks drifted lower on paltry volume, which was pretty weak follow through
from Tuesday’s decline. That was not particularly surprising, given
their recent roller coaster performance and the fact that the Pope’s visit has
dominated the news cycle. That said, all
that volatility has been within a fairly narrow trading range bounded by
17029/1970 on the upside and the lower boundaries of the indices intermediate
term trends (15842/1918) on the downside.
There is really not much else to comment on until one of those
boundaries are successfully challenged.
How
traders are positioned (short):
Market history
following a down August/down September (short):
Fundamental
Headlines
The
US economic data turned more neutral yesterday: weekly mortgage and purchase
applications were up and the September Market manufacturing PMI was basically
flat.
Everything
that you wanted to know about the impending government shutdown but were afraid
to ask (medium):
Overseas,
the numbers were not so good---both the EU and Chinese manufacturing PMI’s were
below estimates.
***overnight,
Draghi downplayed need for further monetary stimulus while the central banks of
Norway and Taiwan cut key interest rates, German business morale rose---which
was likely measured before the VW scandal; further there are rumors that the emissions fraud problem is spreading to BMW.
Aside
from the Pope’s visit there was little else in the headlines; and yesterday’s lackluster
pin action likely reflected a very slow news day.
Bottom
line: No change from yesterday’s
conclusion: ‘As you know, I believe that these fundamentals argue for a
slowing/shrinking economy/corporate profits.
That is a problem when stocks are near their highs based on multiple
measures, though it is not a fatal one. What
makes it fatal is when investor cease to have sugar plum fairies dancing in their
heads---and that seems to be starting to happen as the doubts increase that the
Fed can manage a soft landing. And it is
only going to accelerate when these guys check their history books and learn
something that we have known along, to wit, the Fed has never, ever in all its
history executed a successful transition from easy to tight money. And to make matters worse, any transition from
here will be taking place at a time that the Fed’s balance sheet is exponentially
larger than any other period in its history.
That said, I continue
to believe that right now, short term the technicals are more important to
watch than the fundamentals.’
Dividend
cuts in the REIT’s (short):
More
on corporate profits (short):
Will
the Fed’s inaction be the undoing of the Market? (medium):
Head
of Harvard endowment warns of ‘froth in the Market’ (medium):
http://www.zerohedge.com/news/2015-09-23/harvard-endowment-chief-warns-market-frothy-compares-rate-hike-catalyst-bursting-hou
http://www.zerohedge.com/news/2015-09-23/harvard-endowment-chief-warns-market-frothy-compares-rate-hike-catalyst-bursting-hou
's
Economics
This Week’s Data
The September Markit
manufacturing PMI came in at 53.0 versus forecasts of 53.1.
August durable goods
orders fell 0.2%, in line; ex transportation, they were unchanged versus
expectations of a 0.3% increase.
Weekly
jobless claims rose 3,000 versus estimates of up 11,000.
Other
Emerging
market currencies continue to crash (short):
http://www.zerohedge.com/news/2015-09-23/despite-fed-fold-emerging-market-currency-carnage-continues
Politics
Domestic
International
Apropos
of nothing except raunchy humor, this is some insight to the latest scandal to
hit 10 Downing Street (medium):
Update
on progress of Iran deal (medium):
http://www.zerohedge.com/news/2015-09-23/iran-embarrasses-obama-takes-nuclear-samples-no-supervision
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