Monday, March 21, 2016

Monday Morning Chartology

The Morning Call

The Market

       Monday Morning Chartology

            You don’t need this chart to know the S&P is on a moonshot.   It has overcome several resistance levels but still has more to go to get back to its all-time high.  Right now the assumption has to be that momentum will take it there, though I continue to believe that any challenge will be unsuccessful.

            The long Treasury has had a bumpy ride of late as the risk on trade has been the Market theme.  On Friday, it started a challenge of the upper boundary of a very short term downtrend; if that challenge is successful, it would suggest a shift to more caution in investor sentiment.

            GLD continues to hang tough even though it is extended in price to the upside.  Nevertheless, some additional weakness seems reasonable on a strictly technical; but it would take a major decline to do any technical damage.

            The VIX has been battered over the last four to six week, negating a short term uptrend and busting through its 100 day moving average.  Not surprising, given stocks’ performance.  However, you can see that it is near the lower boundaries of its short and intermediate term trading ranges.   In the 10 to 12 price range, it would be an excellent buy for portfolio insurance purposes.


            ***overnight, Greece and its creditors adjourned a meeting dealing with a third bailout and failing to reach an agreement; February Chinese auto sales plunged 44%.

       Investing for Survival

            Owning cash makes you a better investor.   

    News on Stocks in Our Portfolios
·         Sherwin-Williams (NYSE:SHW) will acquire Valspar (NYSE:VAL) for $113/share in cash, or $11.3B, a 41% premium to VAL's average price over the past 30 days. Excluding assumption of debt, the deal puts an equity valuation of $8.9B on Valspar.
·         Sherwin-Williams and Valspar have highly complementary paints and coatings offerings and this combination enhances Sherwin-Williams position as a premier global paints and coatings provider. The transaction results in an exceptional, diversified array of strong brands and technologies, accelerates Sherwin-Williams growth strategy by expanding its global platform in Asia-Pacific and EMEA, and also adds new capabilities in the packaging and coil segments.
·         The combined company would have pro forma 2015 revenue and adjusted Ebitda (including estimated annual synergies) of approximately $15.6B and $2.8B, respectively, with approximately 58,000 employees.
·         Sees $280M in annual synergies.
·         Expects to close by the end of Q1 calendar year 2017.
·         They expect that no or minimal divestitures should be required to complete the transaction. In the unlikely event that divestitures are required of businesses totaling more than $650M of Valspar's 2015 revenue, the transaction price would be adjusted to $105/share. Sherwin-Williams would have the right to terminate the transaction in the event that required divestitures exceed $1.5B in 2015 revenue. "These provisions provide Sherwin-Williams and Valspar with greater closing certainty."


   This Week’s Data

            The February Chicago Fed national activity index came in at -.29 versus expectations of +.25. January’s number was revised up, but only by about one half the difference.


            Update on student loans (short):



  International War Against Radical Islam

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