Monday, October 31, 2016

Monday Morning Chartology

The Morning Call


The Market

       Monday Morning Chartology

            As you can see, the S&P is now near the lower boundary of the trading range it has been in since mid-July.  While the very short term technicals are not positive (in a very short term downtrend, below its 100 day moving average [now resistance] and a short term trading range), it must still push down out of that tight mid-July to present trading range before I get too beared up.  But if it does, there is little visible support for another 100 points.

            The long Treasury continued its decline, closing below its 100 day moving average (now resistance), below its 200 day moving average (now support) for the second day (if it remains there through the close Tuesday, it will revert to resistance), below a key Fibonacci level and in a developing a very short term downtrend.  However, it remains in short, intermediate and long term uptrends; although it is nearing the lower boundaries of the first two.  Prepare for a challenge of those trends.

            Gold actually ended the week on a positive note---it moved above its 200 day moving average (the lower wiggly red line), negating Wednesday’s break.  Plus it remains above a key Fibonacci level.  On the other hand, it is still below its 100 day moving average and in a short term downtrend.  So some improvement in an otherwise unattractive chart.

            The VIX was much stronger last week than the S&P was weak.  It closed in a very short term uptrend, over its 100 day moving average for the second day (now resistance; if it remains there through the close today, it will revert to support), over its 200 day moving average on the first day (now resistance; if it remains there through the close on Wednesday, it will revert to support) and continued the strong follow through off the lower boundary of its very short term uptrend.  The implications for stocks are not good.


            Growing liquidity problems in China (medium and a must read):

            ***overnight, OPEC failed to reach agreement on production cuts.

            It will be a busy week for data (personal income and spending, both ISM indices, construction spending and factory orders) as well as the central banks.  The Fed holds its November meeting tomorrow and Wednesday; and the Bank of Japan will also convene this week.
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    News on Stocks in Our Portfolios
            Exxon Mobil (NYSE:XOM): Q3 EPS of $0.63 beats by $0.05.
Revenue of $58.7B (-12.8% Y/Y) misses by $2.64B.
            MasterCard (NYSE:MA): Q3 EPS of $1.08 beats by $0.10.
Revenue of $2.88B (+13.8% Y/Y) beats by $130M.
Illinois Tool Works (NYSE:ITW) declares $0.65/share quarterly dividend, in line with previous.


   This Week’s Data

            September personal income rose 0.3% versus expectations of up 0.4%; personal spending was up 0.5%, in line.



            Quote of the day (short):


  International War Against Radical Islam

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