Monday, March 14, 2016

Monday Morning Chartology

The Morning Call


The Market

       Monday Morning Chartology

            The S&P made a third new high on Friday.  In the process, it traded through its 100 day moving average and its 200 day moving average (the wiggly red line) and re-established a very short term uptrend.   If it confirms the breaks of the 100 and 200 day moving averages, the next set of upside resistance are at the upper boundaries of the short term trading range (2104), intermediate term trading range (2134) and long term uptrend (2161).  Clearly, the momentum to the upside is there; but just remember the S&P is 6% away from, not its all-time high, but the upper boundary of a long term uptrend dating back to 1932.  This in a world that is slipping into recession and being managed by a group of central bankers that are pushing an experimental monetary that to date has done more harm than good.

            The long Treasury continues to weaken---though it remains firmly in a very short term downtrend.  Since every central banker and his sister is lowering interest rates, this performance only make since if investors are diving head long into a ‘risk-on’ attitude (sell safety, buy risk).

            GLD was pretty volatile last week.  It remains in very short term and short term uptrends and well above its 100 day moving average.  In fact, it is still a bit overextended on the upside; so more weakness is likely.  While generally considered a ‘risk-off’ trade (sell risk, buy safety), I think that the reason that it is doing better than the TLT is because GLD generally does well in low interest rate environments.

            The VIX was lower last week, as stocks fought to make new short term highs.  As you can see, it is well below its 100 day moving average and is close to making a new very short term low.  While its pin action is supportive of stocks, it is not overwhelmingly so.


            ***overnight, February Chinese factory output and retail sales came in below expectations.  In addition, the government said that it would raise its investments in fixed assets (which is just what a country already swamped by overcapacity needs).

                And February Japanese machine orders surged by 15%.

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