Friday, May 12, 2017

The Morning Call--Comey remains center stag

The Morning Call


Our daughter and her family arrive today to celebrate Mother’s Day weekend.  So no Closing Bell tomorrow.

The Market

The indices (DJIA 20919, S&P 2394) sold off big early in the day, then rallied for the remainder.  Though they still finished down.  Intraday the Dow actually filled one of the two gaps openings that I pointed out previously would likely be closed.  It will have to fall to 20590 to close the other gap.  The S&P did not fill either.  It will have to decline to 2355 to fill both.   Volume was flat; breadth was weaker.   Both remain above their 100 and 200 day moving averages and the lower boundaries of uptrends across all major time frames. 

Yesterday’s intraday recovering by the Averages supports my assumption that they will probably successfully challenge their all-time highs (21228.2402); though the longer they hang around current levels and the more unsuccessful challenges they make on their former highs, the greater the odds that the next move is down. However, that is not to suggest a Market top.  We will only know that when those support levels start to get violated.

The VIX (10.6) was up 4 %, sufficient to close back above the lower boundary of its intermediate term trading range, voiding Monday’s break.  It still has a gap overhead that would require it to trade at 12.2 to be filled.

The long Treasury and the dollar were unchanged; while GLD was up enough to close above its 100 day moving average, avoiding a reversion from support to resistance.

Bottom line:  while the indices finally showed a little life intraday, their close left them hardly changed from the level of the last two/three weeks.  I continue to believe that the question right now is, are the indices resting in preparation for an assault on their former highs or have they shot their wad?  Based on yesterday’s pin action, I think the answer is likely the former; but we won’t know until it happens.


            Aside from everything Comey, there was little occurring yesterday.  US economic stats were mixed: weekly jobless fell versus expectations of a rise, while April PPI ran hotter than anticipated---likely reinforcing the June rate hike scenario.

            ***overnight, the US and China announced a trade deal.  While many characterized it as ‘underwhelming’, it is a first step; and remember the Chinese are incrementalists.

            Overseas, the Bank of England left rates and its bond purchase program unchanged, the EU raised its 2017 GDP growth forecast and April Chinese vehicle sales fell 2.2%.  All fitting developing global trends (strong Europe, weak Asia).

            ***overnight, the Chinese yield curve inverted (medium):

            Bottom line: politicians and the media continued to fill the headlines and airwaves with commentary on the Comey firing.  ‘Rhetoric aside, the only thing that matters, economically speaking, is the impact this controversy has on the Trump fiscal reforms.  I think it too soon to know.  But if you believe the nonchalant response of the Market, this is much ado about nothing.’

            And speaking of Trump fiscal reforms, here is David Stockman’s view (medium):

            My thought for the day: it is important to remember that most of us are not investors; we are savers, who are allocating all or part of that savings to securities.  It doesn’t sound as sexy as being an investor; and unfortunately, the investment business wants you to be believe that you are investor so that they can sell you something sexy (which generally carry higher commissions).  The best strategy we savers can follow is to keep risk at a tolerable level, minimize our trading costs while trying to achieve a growing income stream.

       Investing for Survival
            Buying/selling/ holding is the hardest part.

    News on Stocks in Our Portfolios
            Nike (NYSE:NKE) declares $0.18/share quarterly dividend, in line with previous.

C.H. Robinson Worldwide (NASDAQ:CHRW) declares $0.45/share quarterly dividend, in line with previous.


   This Week’s Data
            April CPI was up 0.2%, in line; ex food and energy, it was up 0.1% versus estimates of up 0.2%.

            April retail sales were up 0.4% versus expectations of up 0.6%; ex autos, they were up 0.3% versus forecasts of up 0.5%.  However, the March numbers were revised up substantially, making the two months together a wash.


            Dutch politicians take on Draghi (medium):

            Update on student loans (medium):

            The latest on Canada’s mortgage lending problem (medium):

                Update on oil (medium):



On Comey and the press; from one of my favorite liberal blogs (medium and a must read):

  International War Against Radical Islam

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