Thursday, August 18, 2016

The Morning Call--The same old story

The Morning Call


The Market

The indices (DJIA 18573, S&P 2182) yo yoed around yesterday as investors seemed to struggle with the implications of the latest FOMC minutes.  Volume continued low and breadth mix.  The VIX fell 3 1/2%, finishing below its 100 day moving average, within a short term downtrend, still close to the lower boundary of its intermediate term trading range (support), but below the lower boundary of its former short term trading range.

The Dow ended [a] above rising 100 day moving average, now support, [b] above its 200 day moving average, now support, [c] within a short term uptrend {17600-19336}, [c] in an intermediate term uptrend {11316-24143} and [d] in a long term uptrend {5541-19431}.

The S&P finished [a] above its rising 100 day moving average, now support, [b] above its 200 day moving average, now support, [c] within a short term uptrend {2065-2304}, [d] in an intermediate uptrend {1917-2519} and [e] in a long term uptrend {862-2400}. 

The long Treasury rose.  While it ended above its 100 day moving average and well within very short term, short term, intermediate term and long term uptrends, it remained below the lower boundary of the developing pennant formation.

GLD was up slightly, ending above its 100 day moving average and within short term and intermediate term uptrends.  However, I am still concerned about last week’s failed second try to surmount a key Fibonacci level and voiding of a very short term uptrend.

Bottom line: the Averages bounced around yesterday before concluding that the FOMC minutes were dovish---which should relieve investors of any latent worries about a September rate hike.  That should also leave a clear path for a challenge of the upper boundaries of the indices long term uptrends. That said, the confusing pin action in the VIX and the bond, gold, oil and currency markets is indicating that something is amiss.  Be careful.
            A bull market in complacency (medium):



            There was only one US datapoint released yesterday: weekly mortgage and purchase applications were down.  Likewise, there was only one number from overseas: June UK unemployment was unchanged.

            ***overnight, July UK retail sales were better than expected; July Chinese home prices rose more than anticipated; July Japanese trade numbers were terrible.

            Didn’t matter; because the Fed was front and center or more accurately the latest FOMC meeting minutes were.  To say they were confusing would be an understatement.  Initially, investors interpreted them as hawkish (stock prices fell); then investors decided that the minutes were dovish (stocks rallied).  On the other hand, the algo-free markets (bonds, the dollar etc.) immediately reacted as though the minutes were dovish.  But let’s not be too hard on the stock guys.  There were so many ‘on the one hand, on the other hand’ narratives and conflicting statements that you couldn’t have made sense out of reading that gibberish if you had the Rosetta Stone. 

Of course, the reason the other markets immediately read the minutes as dovish is because they have learned a crucial point that still seems to escape equity investors, i.e. the Fed has acted dovish for eight years irrespective of whatever bulls**t storyline that it has tried to sell the public.  Indeed, for the stock guys to even consider the likelihood of a September rate hike, shows just how out to touch they are---and provides yet another good example of why valuations are off.

            The Fed may be tighter than we think; though not because it planned it that way (medium):

Bottom line: the one thing you can say for certain is that the Fed has no idea what it is doing and if it does, it has me fooled.  Its latest stab at monetary profundity was little more than a bunch of schizophrenic nonsequiturs which it then was foolish enough to reveal to the public.  This blizzard of bulls**t aside, I remain convinced that there will be no September rate hike. 

In the meantime, sit back and enjoy the part of your portfolio that is invested; but consider taking some money off the table, either selling a portion of the positions in your winners or all of your losers or both.

            Why oil production is unlikely to be cut (short):

            The latest comments from Carl Icahn (medium):

            My thought for the day: Just because you need or want a certain return to maintain your lifestyle/ pay for your kid’s college/ retire doesn’t mean that it is available at anywhere near the risk level that you should be taking.  Today’s Market is a perfect example.  Individuals as well as institutions (pension plans, insurance companies, etc.) need a targeted return to achieve their goals.  But QE, zero interest rates, the chase for yield etc. have made those goals unattainable in the absence of incurring inappropriate levels of risk---which if realized will only make reaching those goals more difficult.  What you need and want right now is patience. 

       Investing for Survival
            Phone scam (short):

    News on Stocks in Our Portfolios

   This Week’s Data

            Weekly jobless claims fell 4,000 versus expectations of a 1,000 decline.

            The August Philadelphia Fed manufacturing index came in a 2, in line.


            Portuguese bonds falter as risk of credit downgrade rises (medium):

            Thursday morning humor (17 minute video):



More on student loans (medium):

Obamacare death spiral (medium):

  International War Against Radical Islam

            Inside the real ground was against ISIS (long):

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