Tuesday, June 6, 2017

The Morning Call--Big Thursday

The Morning Call


The Market

The indices (DJIA 21184, S&P 2436) rested yesterday.  While off, it was not by much.  Nonetheless, that left the Dow below its recent high; meaning that it is still not confirming the S&P’s break above its comparable level.  That leaves the question open as to which of these divergent trends will change direction and confirm the other; but I still believe that the Dow will ultimately trade above its high and the Averages will make a run at the upper boundaries of their long term uptrends (now circa 24198/2753).   Volume fell; breadth weakened.

The VIX (10.1) was up 3 ¼ %, ending below the lower boundary of its intermediate term trading range for the third day (if it remains there through the close today, it will reset to a downtrend) but finishing back above the lower boundary of its long term trading range, voiding Friday’s break.
The long Treasury fell slightly, closing back below its 200 day moving average, voiding Friday’s break but remains above its 100 day moving average and in a very short term uptrend. 

The dollar rose, but remains in a very short term downtrend and below its 100 and 200 day moving averages.

GLD rose, closing above its 100 and 200 day moving averages, in a very short term uptrend and is nearing the upper boundary of its short term trading range.

Bottom line:  TLT, UUP, GLD investors are all betting their money on a weaker economy and lower rates.  That is somewhat at odds with the equity narrative; but I am not sure that means anything in the current ‘all news is good news’ atmosphere.  My assumption remains that the indices are headed higher.

            Stocks first five month performance suggest more gains ahead (short):



            Yesterday was a busy day for economic releases.  Indeed, it incorporated one half of all the reports this week; and they were negative, though the magnitude of the misses were small: the May Markit services PMI, the May ISM nonmanufacturing index were slightly below forecast; April factory orders were negative but in line; and the bright spot was revised first quarter nonfarm productivity and unit labor costs which improved versus their first reading.

            Overseas, the May EU Markit composite PMI was unchanged from April; the Chinese services PMI was better than expected while the UK services PMI was worse; the World Bank forecast 2017 global growth of 2.7% and for 2018 2.9%

            It appears that this will be a news heavy week with Thursday as a standout: UK elections, an ECB meeting and Comey’s testimony.  Each had related events in the headlines today: another terrorist attack in London and Trump indicating that he would not invoke executive privilege in the Comey hearings.  Other items that bear watching include:
(1)   Spain’s sixth largest bank appears on the brink of bankruptcy,

(2)   turmoil among the Gulf States with the state sponsorship of terror as the driving issue; that, in turn, is having an economic impact as gold and Treasuries move higher and oil prices drop,

Bottom line:  there was nothing in the numbers to suggest any change in our economic outlook.  This will be an active week on the political front; but given investors present inclination to view all news as good news, it seems a waste of time to assume anything but a positive reception whatever occurs.

My thought for the day: One of the first decisions you need to make in the process of building an investment portfolio is whether you will be an active or a passive investor.   In doing so, the active versus passive decision comes down to the amount of time you are willing or able to put into your investment process and the degree of stress you can handle in making portfolio decisions.

       Investing for Survival
            Expert predictions.
    News on Stocks in Our Portfolios

   This Week’s Data

            The May Markit services PMI was reported at 53.6 versus expectations of 54.0.

            The May ISM nonmanufacturing index came in at 56.9 versus estimates of 57.0

            April factor orders were down 0.2%, in line.


            The latest from Nouriel Roubini (medium):



Paris Accord was a ‘sham’ until Trump dumped it (medium):

  International War Against Radical Islam

            An assessment of the recent US anti-missile test (medium):

Visit Investing for Survival’s website (http://investingforsurvival.com/home) to learn more about our Investment Strategy, Prices Disciplines and Subscriber Service.

No comments:

Post a Comment