Monday, January 4, 2016

Monday Morning Chartology---What Santa Claus rally?

The Morning Call


The Market

     Monday Morning Chartology

            The S&P made its first higher high last week---the first one in over two months (however, the Dow couldn’t).  But it wasn’t even able to hold above that very short term downtrend.  Plus the 100 day moving average is clearly moving lower.  From a longer term perspective notice the symmetry of how the S&P’s last year’s price action made new higher highs, then a double top, then a series of lower highs---a classic topping formation.  Not that stocks are making a top, but odds are going up.

            The long Treasury just can’t make new highs and its 100 day moving average is starting to roll over.  Certainly not indicative of the bond guys thinking about a recession or a flight to safety.

            This is still the ugliest chart in the land.

            Notice that the VIX has bounced off the very short term uptrend several times and that the 100 day moving average is climbing---not the best short term sign for stock prices.


            Last week’s economic data was mixed, though the most important stat, the Chicago PMI was a big negative.   Nonetheless, I will leave it as a draw, meaning that fourteen out of the last eighteen weeks have been economically disappointing.  However, those four weeks have occurred in the more recent past; so the hope that the economy has stabilized at a lower rate of growth remains alive and well.


(1)   China’s December manufacturing PMI closed below 50 [negative growth], the yuan declined and stock trading was halted after circuit breakers were tripped; the UK reported a weak PMI number; however, the Eurozone’s PMI’s both collectively and individually were up,

(2)   Saudi Arabia executed a Shi’a cleric and cut diplomatic relations with Iran; Iranian protestors storm and burn Saudi embassy.

            Update on valuation: regression to trend (short and a must read):

            The latest from JP Morgan (medium and a must read):

            Update on the municipal debt problem (medium):

            The latest from Nassim Taleb (medium and a must read):

       Investing for Survival
            Risks that can devastate your retirement:
    News on Stocks in Our Portfolios
            Johnson & Johnson (NYSE:JNJ) declares $.75 share quarterly dividend, in line with previous.


   This Week’s Data




  International War Against Radical Islam

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