Thursday, June 23, 2016

The Morning Call---Soon it will be over

The Morning Call


The Market

The indices (DJIA 17780, S&P 2085) drifted lower yesterday, as investors continued to sit on the sidelines awaiting today’s Brexit vote. Volume was quite low---not surprising in a wait and see Market.  Breadth weakened.  The VIX spiked 14%, most likely investors hedging against a possible ‘leave’ vote.

The Dow closed [a] above its rising 100 day moving average, now support, [b] above its rising 200 day moving average, now support, [c] within a short term trading range {17498-18726}, [c] in an intermediate term trading range {15842-18295} and [d] in a long term uptrend {5541-19413}.

The S&P finished [a] above its rising 100 day moving average, now support, [b] above its rising 200 day moving average, now support, [c] within a short term trading range {2037-2110}, [d] in an intermediate term trading range {1867-2134} and [e] in a long term uptrend {830-2218}. 

The long Treasury rose, bouncing off a key Fibonacci level.  It remained above its 100 day moving average and within short, intermediate and long term uptrends.

GLD (120.9) was up fractionally.  Unfortunately, that was no real improvement to its recent erratic behavior.  The good news is that it remains above its 100 day moving average.

Bottom line: all was quiet awaiting today’s Brexit vote.  Nonetheless, on a very short term basis, a lower high has been made following a lower low.  Clearly not an upbeat signal.  However, I continue to assume that until the lower boundaries of the Averages short term trading ranges are successfully challenged, momentum is to the upside.



            Two US datapoints yesterday: weekly mortgage applications rose while purchase applications fell and May existing home sales were up less than anticipated.  The bulk of this week’s stats come today and tomorrow; so I await those numbers before making any judgment on this week’s data.  In addition, there were no international economic releases.

            ***overnight, the June Japanese Markit flash PMI came in flat with May’s report.

            Yellen resumed her testimony yesterday.  However, the substance of her remarks was such thin cruel that the Market hardly noticed.

Bottom line: yesterday was another dull day with little new economic data available either here or abroad and Yellen hardly making a peep.  ‘at the moment, all eyes are on the Brexit vote….. But even if the ‘remain’ vote prevails, the fundamentals are still lousy.
Nonetheless, the overriding circumstance at this moment is that stocks remain dramatically overvalued even under the most promising economic/political scenario.  Hence, I continue to believe that this is the moment to sell a portion of your most successful investments and to get rid of your losers.’

            A discussion with a London odds maker on the Brexit (medium):

            My thought for the day: investing successfully is not easy; if it was, we would all be rich.  Economic analysis, security analysis, portfolio asset allocation are time consuming processes and no matter how much time you spend there is no guarantee of attaining even modest objectives.

If that weren’t enough, almost all investors are subject to cognitive errors that can lay waste to the best analysis.  Among them: seeing patterns that don’t exist, giving undue weight to those facts that agree with our own expectations and ignoring those that don’t, not paying as much attention to the factors that led to losses versus those that lead to our winners, being too emotional and putting too much trust/faith in the validity of good ‘story’.  As humans we are all susceptible to the mental errors.  But it is important to be aware of them; and when making an investment decision, ask ourselves if any of these biases are in play.
       Investing for Survival
            What to expect from bonds in a crisis.

    News on Stocks in Our Portfolios
            Accenture (NYSE:ACN): FQ3 EPS of $1.41 in-line.
Revenue of $8.43B (+8.5% Y/Y) beats by $90M


   This Week’s Data

            May existing home sales rose 1.8% versus expectations of up 2.2%.

            Weekly jobless claims fell 18,000 versus estimates of a 7,000 decline.

            The May Chicago National Activity Index was reported at -.51 versus April’s reading of +0.5.


            Some tertiary numbers from my favorite optimist (short):

            On the cusp of a recession? (medium):

            Greg Mankiw on the economy (medium):

            Why the middle class is shrinking (short):



Meet the new nominee to head the Library of Congress (medium):

Clinton aide pleads the fifth 125 times (medium):

The (hopefully) beginning of the end of civil forfeiture (medium):

  International War Against Radical Islam

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