Monday Morning Chartology
As usual, the S&P’s chart speaks for itself---a relentless advance.
At the end of a horrible two weeks of pin action, the long Treasury did manage to bounce off the lower boundary of its short term trading range. What matters at this point is follow through to the upside. If not, then the short term trading range resets to down and the lower boundary of its intermediate term trading range is only a couple of points away.
GLD’s chart has gone from hopeful to hopeless. It did advance ever so slightly on Friday, in keeping with a rising TLT and a declining dollar. However, the move was almost undetectable and suggests gold investors aren’t buying lower rates and a weakening dollar.
The dollar fell below the lower boundary of its very short term trading range; a close there today would negate the trend. The action of bonds (rates lower) and the dollar (price weakness) is consistent. Now we see if Friday was a respite or a change in trend.
The VIX remains near its historical low, indicating complacency among investors. It is trying to set a very short term uptrend but that doesn’t carry a lot of weight when it is solidly below its 100 and 200 day moving averages and in a short term downtrend. Still all changes in trend start somewhere.
Last week’s economic indicators were weighed to the negative side, while the primary indicators (January factory orders [+] and fourth quarter productivity and unit labor costs [-]) were a wash. Adding to these downbeat numbers, the Atlanta Fed revised lower its first quarter GDP growth forecast twice. The score: in the last 75 weeks, twenty-four were positive, forty-three negative and eight neutral.
Overseas, the stats continued their winning ways. In addition, the ECB left rates unchanged which puts them at odds with the Fed which it is believed will to raise rates again this week. That said, in a post meeting press conference, Draghi acknowledged that economic conditions were improving, suggesting that a change in policy is in the future. That should keep currency valuations (trade) stable.
The Bank of Japan also appears to be moving toward some sort of ‘tapering’ (medium):
How far the Fed is behind the curve (short):
The latest from Bill Gross (medium):
The model was doomed to fail (medium):
Update on Buffett indicator (short):
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Ritholtz rules of valuation.
News on Stocks in Our Portfolios
This Week’s Data
What it took to buy a dollar’s worth of GDP in 2016 (medium):
Update on household net worth (short):
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