Tuesday, January 10, 2017

The Morning Call--The real work now begins

The Morning Call


The Market

Yesterday, the indices (DJIA 19887, S&P 2268) rested again.  Volume was down slightly but is still high.  Breadth weakened modestly.   The VIX (11.6) rose 2 %, but still closed below its 200 day moving average (now resistance), below its 100 day moving average (now resistance), within a short term downtrend and remains close to the lower boundary of its intermediate term trading range (10.3).  
The Dow ended [a] above its 100 day moving average, now support, [b] above its 200 day moving average, now support, [c] in a short term uptrend {18429-20469}, [c] in an intermediate term uptrend {11685-24535} and [d] in a long term uptrend {5730-20318}.

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 uptrend {2149-2493}, [d] in an intermediate uptrend {2019-2621} and [e] in a long term uptrend {881-2435}. 

The long Treasury resumed its climb but still ended in a very short term downtrend, in a short term trading range and below the 100 day moving average (now resistance), falling further below its 200 day moving average (now resistance).  It still has plenty of room to rebound before it meets any of the multiple resistance levels or threatens to break any major downtrends.

GLD continued to mimic TLT, moving higher but remaining in a short term downtrend and below its 100 day moving average (now resistance) which continues to push further below its 200 day moving average (now resistance).   Also like TLT, it can recover significantly before threatening to challenge major resistance/downtrends.

The dollar declined, continuing its pattern of acting in reverse of GLD and TLT, finishing considerably above multiple support levels---so it can fall a lot and not challenge its 100 or 200 day moving averages (now support) or its short term uptrend.   

Bottom line: my assumption continues to be that the indices will at least challenge the 20000/2300 levels; and if victorious, there is no resistance between those levels and the upper boundaries of their long term uptrends.  But as you know, I don’t believe any such challenge (of the upper boundaries) will be successful.

             TLT, GLD and UUP continue to rebound from extreme positions.  Part of this is related to the turmoil in the Chinese and Mexican currency markets, part of it seems to be function of waning optimism among the bond boys about the strength of any impact of the Trump/GOP fiscal/regulatory reforms.  Clearly the latter is in direct conflict with the giddy attitude of stock investors.  I am not saying who is right; just that there appears to be some dissention in the ranks.

            Yesterday in the charts (medium):



            US economic data was mixed yesterday: the December labor market condition index was a disappointment; November consumer credit was up---depending on your point of view that could be good (consumer continuing to spend) or bad (consumer just shot its wad).

            Overseas, the numbers were also mixed: November German industrial production was below estimates, while exports were ahead of forecasts; Italian unemployment rose again; EU investor sentiment advanced.

Bottom line:  there was not a lot of info in the stats, though a mixed picture on the international front continues the support the notion that the global economy could be stabilizing. 

Trump cabinet nominees start working their way through the congressional approval process this week.  I mention it only because it will provide an initial look at just how obstructionist the dems are going to be and how effective that strategy will be---which would in turn be an early read on the reasonableness of the Trump euphoria.

            My thought for the day: intuitively, we think that the more choices we have, the better. However, the sad truth is that too many choices can lead to decision paralysis due to information overload. In other words, the more choices an investor has, the fewer investments he/she makes.  It is also why they rely on old rules of thumb rather than doing their homework---not a prescription for success.
       Investing for Survival
            January advice.
    News on Stocks in Our Portfolios

   This Week’s Data

            The December labor market condition index came in at -0.3 versus the November reading of 1.5.

            November consumer credit expanded $24.5 billion versus expectations of $18.5 billion.

                        The December small business optimism index rose to 105.8 versus estimates of 99.6.


            Can Trumponomics fix was is broken? (medium):

            Social security taxes set to rise in 2017 (short):

            On the recent great rise in worker earnings (medium):



Trump delays repeal of Obamacare (medium):

  International War Against Radical Islam

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