Wednesday, March 8, 2017

The Morning Call--Off to a good start

The Morning Call


The Market

The indices (DJIA 20924, S&P 2368) continued a very tame consolidation.  Volume rose slightly, remaining at a high level; breadth was mixed, but remained overbought.   The VIX (11.5) was up another 2%, but still ended below its 100 and 200 day moving averages (now resistance) and in a short term downtrend and is near the lower boundary of its intermediate term trading range (10.3)---leaving complacency at a near record high level.

The Dow closed [a] above its 100 day moving average, now support, [b] above its 200 day moving average, now support, [c] in a short term uptrend {18913-21208}, [c] in an intermediate term uptrend {11815-24667} and [d] in a long term uptrend {5751-23298}.

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 {2214-2546}, [d] in an intermediate uptrend {2059-2663} and [e] in a long term uptrend {881-2561}.

The long Treasury was down, staying below the lower boundary of that developing pennant for a second day and negating that formation.  It is below its 100 and 200 day moving averages and in a very short term downtrend.

GLD fell and closed just barely above its 100 day moving average (now support).  Nevertheless, it ended below its 200 day moving average (now resistance) and within a short term downtrend. 

The dollar was up, ending above its 100 day moving average (now support), its 200 day moving average (now support), in a short term uptrend and seems to have set a new very short term uptrend.  

Bottom line: the Averages are handling the consolidation from an overbought condition very well.  The assumption continues to be that they are headed for the upper boundaries of their long term uptrends.  Bonds, the dollar and gold are all pointing at an improving economy and a tightening Fed.

            Blow off tops. Part 1

            Part 2:

            Indices at an inflexion point? (short):



            Two minor datapoints were released yesterday: the January trade deficit was in line with forecasts; month to date retail chain store sales growth slowed from the prior week.  Overseas, the numbers were not good: fourth quarter EU GDP growth was slightly below estimates and January German industrial orders plunged 7.4%.

            ***overnight, fourth quarter Japanese GDP growth was less than anticipated.

Bottom line: I thought that the markets did very well following the presentation of the draft of repeal and replace Obamacare legislation.  They were certainly set up for a ‘sell the news’ response as the Trump fiscal program made its real time debut.  Sure they were off; but relative calm prevailed.  That said one day is not enough to dismiss the ‘sell the news’ notion especially given that there is a lot of back and forth left on Obamacare and taxes and infrastructure spending measures are not even on the table yet.  My investment stance is unchanged---cash is an asset class that should have a healthy representation in your portfolio.

            The latest from Doug Kass (medium):

            The latest from Jeff Gundlach (medium):

            My thought for the day: never make an investment decision during an excited state.  This is your hard earned money.  Emotions have no place in the realm of financial decision making.  If you need to take a 30 minute time out, do it.  Get yourself under control.  The price of whatever security that you are considering buying/selling won’t have changed that much; but the quality of your decision making capability will have.

       Investing for Survival
            The ‘too hard’ pile.
    News on Stocks in Our Portfolios

   This Week’s Data

            Weekly mortgage applications rose 3.3% while purchase applications were up 2.0%.

            The February ADP private payroll reports showed job increases of 298,000 versus expectations of 183,000.

            Fourth quarter productivity rose 1.3% versus estimates of up 1.4%; unit labor costs advanced 1.7% versus forecasts of up 1.6%.

            January consumer credit was up $8.8 billion versus consensus of up $18.3 billion.


            Fitch predicts drop in oil prices (short):

            Atlanta Fed slashes its first quarter GDP estimate---again (short):

            OECD is revising its 2017 outlook for global growth down (medium):



WikiLeaks unveils Vault 7 (a bit long but something we should all know):

  International War Against Radical Islam

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