Friday, April 1, 2016

The Morning Call--Earnings season not far away

The Morning Call


The Market

The indices (DJIA 17685, S&P 2059) slipped a bit on a quarter end window dressing day though both remained within very short term uptrends.  Volume rose but remained low, while breadth weakened but remained mixed.  The VIX bounced 3.5%, but stayed within a very short term downtrend.  While it remains well below its 100 day moving average and within a short term trading range, it is still close to the 10-12 attractive price range.

The Dow closed [a] above its 100 day moving average, now support, [b] above its 200 day moving average, now support, [c] in a short term a trading range {15431-17758}, [c] in an intermediate term trading range {15842-18295} and [d] in a long term uptrend {5471-19343}.

The S&P finished [a] above its 100 day moving average, now support, [b] above its 200 day moving average, now support, [c] within a short term trading range {1867-2081}, [d] in an intermediate term trading range {1867-2134} and [e] in a long term uptrend {800-2161}. 

The long Treasury rose, finishing above a Fibonacci support level and continuing to form a very short term uptrend.  

GLD rebounded, ending above its 100 day moving average, in a short term uptrend but is developing a very short term downtrend.

Bottom line:  yesterday’s dip did little to damage the bull case.  Still volume and breadth may not be as strong as investors would like.  However, until proven otherwise, the assumption, at this point, is that there is a strong probability that the Averages will successfully challenge the upper boundaries of their current consolidation range which would, in turn, clear the way for a run at their all-time highs.  Nevertheless, I do not believe those highs or the upper boundaries of the indices long term uptrends will be breached.

            NYSE margin debt and the S&P (medium):



            Two economic indicators were released yesterday: weekly jobless claims rose more than anticipated while the March Chicago PMI was much stronger than expected.  That extends the recent positive trend set by the regional Fed bank manufacturing indices.  As you know, manufacturing has been the weakest segment in the economy over the last year.  We get the ISM manufacturing index today; and if that is a plus, then we could be seeing a turn in this important part of the economy.

            Overseas, March EU inflation fell, German unemployment was unchanged from February and S&P put China on its credit watch list.  No help here.
            ***overnight, March Chinese manufacturing and services PMI’s were up versus February’s reading, Japanese business sentiment fell as did the Markit flash manufacturing PMI, South Korean trade data stunk, the March EU flash manufacturing PMI rose slightly while the UK PMI declined, March EU consumer prices dropped, Italian unemployment rose and, drumroll please, Saudi Arabia said that it will only freeze oil production if Iran joins the effort.

Bottom line:  it was a quiet day as institutional investors wrapped up their end of quarter window dressing.  Of course, that means that earnings season can’t be far away.  At the moment, it seems everyone knows that the numbers aren’t going to be pretty, though I am not sure if that is just a generalized notion that profits will be disappointing---but not for ‘my’ stocks.  It does seem a bit inconsistent for earnings to be dropping and the S&P only three to four percent off its all-time high.   

In my opinion, the current rally represents an excellent opportunity to raise cash reserves by selling either a portion of your profitable investments and/or sell your losers.

            Fed confusion (medium):

                        Is the Fed now outsourcing policy to the Market? (medium):

            Bank of China now buying stocks.  What could possibly go wrong? (medium):

       Investing for Survival
            Hard truths for investors to accept.

    News on Stocks in Our Portfolios

   This Week’s Data

            The March Chicago PMI came in at 53.6 versus expectations of 50.3.

            March nonfarm payrolls fell 30,000 versus estimates of a 32,000 decline; unemployment ticked up to 5.0% from 4.9%.




Obamacare is sick and getting sicker (medium):

This is scary (medium):

  International War Against Radical Islam

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