Wednesday, June 14, 2017

The Morning Call--Fed watch (what about CPI?)

The Morning Call


The Market

The indices (DJIA 21328, S&P 2440) had a good day, with (1) the Dow closing above its former high for the third day, confirming the break and putting it back in unison with the S&P and (2) the S&P leaving last Friday’s outside down day as nothing more than an oddity.  At the moment, I see nothing, technically speaking to inhibit the Averages challenge of the upper boundaries---now circa 24198/2753.  Volume declined and breadth improved.

The VIX (10.4) was off 8 ¾ %, finishing below its 100 and 200 day moving averages and above the lower boundaries of its intermediate and long term trading ranges.

The long Treasury managed a slight uptick, leaving it below its 200 day moving average but above its 100 day moving average and in a very short term uptrend.  The gap between the upper boundary of its short term downtrend and lower boundary of its long term uptrend continues to narrow.

The dollar was also down, leaving its chart with an ugly look---ending in a very short term downtrend and below its 100 and 200 day moving averages.

GLD recovered, ending above its 100 and 200 day moving averages.  Plus, the 100 day moving average is about to cross above its 200 day moving average which is usually a positive technical signal.  However, this chart is getting a bit ugly. 

Bottom line: yesterday’s pin action ended the period of divergent behavior of the Averages and sets the stage for their advance toward the upper boundaries of their long term uptrends.



            Yesterday’s US stats were mixed: the May small business optimism index was slightly better than anticipated, month to date retail chain store growth rate slipped from the prior week and the May PPI headline number was less than expected while the ex food and energy figure was higher.    

Overseas, May German investor confidence unexpectedly declined; May UK CPI came in hotter than anticipated.
***overnight, May Chinese retail came in as expected, fixed investment was lower than anticipated while industrial output was higher.

            In the center ring yesterday was the Jeff Sessions’ congressional testimony which was not worth the price of admission.  More much ado about nothing.  Given the pin action, it would also appear that is the Street consensus.   If you have been asleep or in the Outback and missed it, a decent summary is below.  

Bottom line: it has been a relatively boring start to the week; but activity picks up today with the conclusion of the FOMC meeting and the start of a busy three days of economic data releases.

‘Of course, as long as all news is good news, none of this will matter; and until some factor alters current Market psychology, investors will likely continue to bid up stock prices as they have been for the last two years.’

            More on valuation (medium):

            The latest from Doug Kass (medium):

            The latest from Bill Gross (medium):

            The latest from Lance Roberts (medium):

                My thought for the day:  good investors have a high regard for uncertainty---i.e. that anything can happen.  They have learned that they can never be confident that their investment strategy/discipline/model is going to work.  As a result, part of that strategy/discipline/model has to allow for an escape hatch.  That is the whole point behind my integrating a Stop Loss Price into my Buy Discipline---my model can be wrong and I don’t to pay too high a price for it.

        Subscriber Alert

            The stock price of South Jersey Industries (SJI-$38) has traded into its Sell Half Range.  Coincidentally, I have been in the process of updating the file on SJI and as fate would have it, the company failed to meet the quality criteria for inclusion in the Dividend Growth Universe.  Accordingly, the Dividend Growth Portfolio will Sell its entire position in SJI at the Market open.

       Investing for Survival

            The unknown unknowns of investing.

    News on Stocks in Our Portfolios
Microsoft (NASDAQ:MSFT) declares $0.39/share quarterly dividend, in line with previous.


   This Week’s Data
            Month to date retail chain store sales grew at a slower pace than in the prior week.
            Weekly mortgage applications rose 2.8% while purchase applications fell 3.0%.

            May CPI was down 0.1% versus consensus of 0.0%; ex food and energy, it was up 0.1% versus estimates of up 0.2%.

            May retail sales fell 0.3% versus expectations of up 0.1%; ex autos, they declined 0.3% versus projections of up 0.2%.


            More on auto loans (medium):

            David Stockman on the upcoming vote on the debt ceiling (medium):



More suits filed against the Trump administration (medium):

  International War Against Radical Islam

            Game theory + Qatar cut off = uh oh (short):

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