Monday, October 12, 2015

Monday Morning Chartology

The Morning Call


The Market

            The S&P staged a hell of a rally last week, on the top of the prior Friday’s major intraday reversal---negating the break of the lower boundary of its intermediate term uptrend and blowing through the 1970 resistance level.  It closed last week below its 100 and 200 day moving averages, within a short term downtrend and in the aforementioned intermediate term uptrend.  Notice the advanced stopped right on the mid-September high.  That is not to suggest that the rally is over.  But given that stocks are in an extremely elevated overbought position, some softness near term would not be surprise.  I know that I have said that before.

            Apparently, no one told the bond guys that the Fed was going to stay zero bound forever.  As you can see, the long Treasury was off in price (up in yield) in the midst of stocks Titan III formation last week.  It remains above its 100 day moving average and within trading ranges on a very short term, short term and intermediate term basis.

            Gold is trying hard to improve its chart.  As you can see, it negated its short term downtrend last week, resetting it to a trading range.  In addition, it closed above its 100 day moving average on Friday; if it remains there through the close on Wednesday, the MA will revert from resistance to support.  I am getting close to nibbling.

            The VIX (17) reflected stocks upside last week.  It broke its short term uptrend, then broke the re-set trading range and is now in a short term downtrend.  However, it remained above its 100 day moving average and within its intermediate term trading range.  A move back to the 13 level would again make it attractive as portfolio insurance.

            Halloween to Christmas---a great time to own stocks (short):


            Last week’s economic data continued to be disappointing: above estimates: weekly jobless claims, import prices and September retail chain store sales; below estimates: August wholesale sales, September Markit services PMI, September ISM nonmanufacturing index, September Gallup consumer spending survey, export prices and September consumer credit; in line: the August US trade balance, August wholesale inventories and weekly mortgage and purchase applications. The only primary indicator was the ISM nonmanufacturing index.  So we have now had six consecutive below average weeks of data.  I will revise our forecast down (again) this week.

            The other big news item last week was the release of the minutes from latest FOMC meeting; the bottom line of which was that its tone was much more dovish than many expected---hence the moon shot as the QEInfinity crowd is in control of the market, again.

            The minutes (medium):

            Why the Fed is so dovish (medium):

            The post FOMC meeting rally (short):

Why the Fed is so wrong (medium):

            Overseas, the news was more plentiful and worse.  Except for the successful conclusion of the negotiations of the Trans Pacific Partnership, the data was all negative: EU services PMI, composite PMI and consumer confidence; the World Bank lowered China growth estimates; German factory order, industrial production and exports; and Japanese machinery orders.

            Speaking of China (short):

            Junk rally (short):

            The share buyback mirage (medium):

       Investing for Survival
            Learning to deal with market uncertainty

    News on Stocks in Our Portfolios

   This Week’s Data


            Profit margins are mean reverting (short):

            The non-velocity of money (short):

            Is the IMF stretched too thin (medium):

            US debt to GDP revised up (medium):

            Japanese retailers pronounce Abenomics a failure (medium):



  International War Against Radical Islam

            The war in Syria grows (medium):
            And gets a wee bit hotter (medium):

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