Monday, September 19, 2016

The Morning Call---The only thing I missed was more of the same

The Morning Call

9/19/16

The Market
         
    Technical

            Last week, the S&P unsuccessfully challenged its 100 day moving average and threatened to challenge the lower boundary of its short term uptrend---unsuccessfully being the operative word.  Nothing in this pin action to suggest any meaningful loss of upward momentum.  It remains in uptrends across all timeframes.



            The long Treasury took it in the snoot (successfully challenging its very short term uptrend and its 100 day moving average) following the Fed campaign to convince investors that a rate hike was coming in September.  But despite the fact that it is now not likely to happen, TLT remains down---probably because the Fed’s efforts are now focused on talking up a December rate hike.  Of course, if the economic data continues to weaken (see below), the odds of that occurring aren’t any more likely than a September increase.  Until TLT’s short/medium term uptrends are being threatened, this latest move is not seriously concerning.



            GLD was also a victim of the Fed’s September rate hike promotion; though the technical damage was more significant for it than for the TLT.  It has broken its short term uptrend and will confirm it today absent a rebound.  It is also near a challenge of its 100 day moving average.  The chart for GDX is more impaired than GLD.  A breakdown in GLD today will likely lead to action.



            There has clearly been a pickup in volatility in the last couple of weeks with the VIX making two higher lows and breaking above its 100 day moving average, then confirming it.  Still it is not going to develop into a negative for stocks until it successfully challenges its short term downtrend.



    Fundamental

            While I was on vacation, the economy turned in three poor weeks of numbers.  In the week of August 29th, the overall data was weighed to the negative as were the primary indicators: July personal income (0), July personal spending (0), second quarter productivity (0), the August ISM manufacturing index (-), July construction spending (-), August nonfarm payrolls, (-) and July factory orders (-).

            The week of September 9th was a slow one with only five datapoints recorded (two positive and three negative) with one negative primary indicator: August ISM nonmanufacturing index.

            Last week was quite negative and included two primary indicators: August retail sales (-) and August industrial production (-).

            The performance certainly supports our recession scenario and brings the score at 52 weeks to fifteen positive, thirty four negative and three neutral.

            In addition, the Fed proved once again that it has no idea what it is doing as it set the Market up for a rate hike, then had to back off when the numbers turned to sh*t.

            In short, I didn’t miss much in the way of a changing investment landscape.  The economy is weak, the Fed is clueless and stocks are overvalued.

            Goldman downgrades equities (short):

            Update on valuations (short):

            The bubble grows ever larger (medium):

     Subscriber Alert

            The underlying fundamental condition of Chevron (CVX-$97) continues to deteriorate while the stock has rallied almost 50% off its recent low.  At the open this morning, the Dividend Growth Portfolio will Sell its position in CVX.  The company is being Removed from the Dividend Growth Universe.

    News on Stocks in Our Portfolios
 
Oracle (NASDAQ:ORCL): FQ1 EPS of $0.55 misses by $0.03.
Revenue of $8.6B (+1.8% Y/Y) misses by $100M.

Economics

   This Week’s Data

   Other

            Harvard on the ‘Obama recovery’ (medium):

            Update on US corporate debt (medium):

            Update on big four economic indicators (medium):

            Inside the household net worth stat (medium):

                China’s mounting debt problem (short):

Politics

  Domestic

Quote of the day (short):

Nassim Taleb on our intellectual elite (medium):

  International War Against Radical Islam


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