Thursday, October 29, 2015

The Morning Call--Some things never change

The Morning Call


I am off for a weekend with friends in Santa Fe.  No Morning Call tomorrow and no Closing Bell

The Market

The indices (DJIA 17779, S&P 2090) took off again yesterday.  The Dow ended [a] above its 100 moving average, now support, [b] above its 200 day moving average, reverting from resistance to support, [c] above the upper boundary of its short term downtrend {17036-17751}; if it remains there through the close on Friday, it will re-set to a trading range, [d] in an intermediate term trading range {15842-18295} and [e] in a long term uptrend {5369-19241}.

The S&P finished [a] above its 100 moving average, now support, [b] above its 200 day moving average, now support, [c] in a short term trading range {2016-2104}, [d] in an intermediate term uptrend {1943-2735} [e] a long term uptrend {797-2161}, [e] above its September highs, now representing support.

Volume was flat; breadth was up.  The VIX (14.3) fell 7%,  finishing [a] below its 100 day moving average, now resistance, [b] within a short term downtrend and [c] in intermediate term and long term trading ranges.  Below 13, it will again represent good portfolio insurance.
The long Treasury was down fractionally, apparently not that impressed with a more hawkish Fed and ending above its 100 day moving average, still support, within very short term, short term and intermediate term trading ranges and continues to develop a pennant formation. 

            Italy sells bonds at a negative interest rate (sucker) (medium):

GLD was down, closing [a] above its 100 day moving average, now support [b] in a short term uptrend [c] in intermediate and long term downtrends.  In my opinion, it needs to successfully challenge the upper boundary of its intermediate term downtrend to conclusively establish that a bottom has been made.

Oil was very strong, ending below its 100 day moving average, bouncing off the lower boundary of it very short term trading range but still within very short term and short term trading ranges. 

The dollar was up 1% (it was impressed with the Fed statement), finishing above its 100 moving average day, now support and above its 200 day moving average, now support.  It remains within short and intermediate term trading ranges.  However, it broke above the upper boundary of a very short term downtrend; if it remains there through the close today, it will reset to a trading range.

Bottom line: the Averages continued to push through resistance levels, gradually wiping out barrier after barrier and raising the odds of challenging their all-time highs and the upper boundaries of their long term uptrend.  Although I continue to believe that any of those challenges will be unsuccessful.



            There were a couple of minor datapoints released yesterday: weekly mortgage and purchase applications were down and so was the September US trade balance.

            However, as you know the focus was on the central banks.  Overseas, the Swedish central bank embarked on its fourth round of QE.

            ***overnight, October German unemployment fell and September Japanese industrial production was better than forecast.

            Of course, center stage and the treat of the day was the Fed statement following this week’s FOMC meeting.  To summarize, it left interest rates unchanged, downplayed its concern about the global economy, noted that job growth had slowed but that household spending and business investment were slightly better. 

All that considered, it was a tad more hawkish than expected.  However, it begs the question what global data and household spending and business investment numbers is the Fed looking at?  As you know, the stats were terrible for eight weeks, followed by a one week reprieve and now it appears that the economy is back on track to under deliver again this week.  Which begs the other question, how can an economy that has been underperforming since the last FOMC meeting be doing better?  

The answer is that we all know that what the Fed says about the economy doesn’t mean diddily.  Mario Draghi could get a headache tomorrow (or more importantly the Dow could be off 1,000 points) and suddenly the ‘tone’ of the Fed would reset to dovish. 
            The Fed’s statement (medium):

            Fed whisperer Hilsenrath’s statement (medium):

            The Fed is fighting the wrong war (medium and a must read):
Bottom line:  yesterday’s Fed statement was more of the same inane blather foisted on the public by a Fed whose sole concern is a bunch of whiney butt Wall Street prima donnas in the hope that they will continue to bail the Fed out of an otherwise untenable position---which is to say, keep the Market up despite an economy that is sinking into recession as a result of the gross misallocation of assets and prices brought on by an otherwise senseless experiment in bureaucratic hubris.

I would not chase stock prices at these levels.  Indeed, I would use the strength to take some profits in winners and/or eliminating investments that have been a disappointment.


   This Week’s Data

            Weekly jobless claims rose 1,000 versus expectations of up 6,000.
Third quarter GDP came in up 1.5% versus estimates of up 1.7%.




Why the budget/debt ceiling deal is a bad deal (medium and a must read):

And second round of applause from David Stockman (medium):

  International War Against Radical Islam

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