The indices (DJIA 21008, S&P 2411) drifted lower again yesterday, still finishing above their 100 and 200 day moving averages and the lower boundaries of uptrends across all major time frames. The key technical variable for me at the moment is that while the S&P remains above its recent high (2402), the Dow has not (21228) yet challenged its high. In order for me to assume that the next targets for the Averages are now the upper boundaries of their long term uptrends, the Dow has to get through the 21228 level. Volume rose; while breadth weakened.
The VIX (10.4) was up fractionally, ending ended below its 100 and 200 day moving averages, now resistance and within a short term downtrend. However, it closed (just barely) above the lower boundaries of both its intermediate term and long term trading ranges.
The long Treasury was up, continuing to ignore the consequences of a June rate hike. It closed between narrowing distances its 100 and 200 day moving averages (it is closing in on the latter) and the upper boundary of its short term downtrend and the lower boundary of its long term uptrend.
The dollar was down again also reflecting doubts that the economic is improving/rates are rising. It ended below its 100 and 200 day moving averages, within a very short term downtrend and a short term trading range.
GLD was up, finishing above its 100 and 200 day moving averages, within a short term trading range and is building a very short term uptrend---not the typical pin action amid fears of increasing interest rates.
Bottom line: the technical issue now is, will the Dow successfully challenge its former high or will the S&P fall back, making this latest move up a false flag? Given how well the S&P is holding 2402, I have to assume that the answer is the former. But even if it is not, there is currently little danger of a trend reversal.
Update on margin debt (medium):
Yesterday’s economic data was weak: month to date retail chain store sales, weekly mortgage and purchase applications and April pending home sales were all disappointing; the bright spot was the May Chicago PMI which was better than expected.
Overseas, April EU inflation was lightly less than anticipated, the May Chinese manufacturing PMI was flat while the nonmanufacturing PMI was better than expected; and the BOJ said it would keep its QEInfinity purchases in place for June.
***overnight, the May UK and EU Markit manufacturing PMI’s were above forecasts.
The high spot of the day was the release of the minutes of the latest FOMC meeting. The headline was the now regular assessment that the economy was progressing at a ‘modest to moderate’ pace. It then observed that (1) consumer spending was soft in some districts, (2) agricultural conditions were mixed, (3) there was little pricing [inflation] pressure, but (4) the labor market remains tight---which begs the question, how can simultaneously the labor market be tight and there be no wage growth [inflation]? Ah, the joys of writing your own narrative uncluttered by the facts. In any case, the consensus among the chattering class is to expect a June rate hike---just don’t tell that to the bond guys.
Bottom line: the Fed gave its usual performance---(1) stating that ‘all is well’, (2) but pointing out the problems that challenge an ‘all is well’ narrative and (3) then concluding that in spite of ‘all not being well’, it will continue on its predetermined path. I want that job: ignore the facts, make sh*t up, do what you please, have the media hang on every word and get paid a butt load of money. My belief remains that these people are going to wreck the Market---again.
Dear Fed, it is not hard to spot a bubble (medium and a must read):
Summary of first quarter earnings, from a bull (medium):
My thought for the day: why are you trying to manage your own money? Is it that you love doing it? Is it the “thrill of the chase and the agony of defeat” syndrome? Or, did you just think that is what you are supposed to do? It's a fair question, you've probably been asked it before, you've probably even got a well thought out answer. However, the real question that you need to ask yourself is “Am I successful at managing the future of my family and my retirement?”
Successful investors search for value. They leverage advantage. They look for small truths and they hope other people don't notice. They manage risk, and expect rewards for playing well. They like the sport. They like knowing.
Average investors (gamblers) are people who either don't know what they are doing, or like to bet against the odds.
The stock price of 3M (MMM-$204) has traded into its Sell Half Range. According the Dividend Growth and High Yield Portfolios will Sell Half of their positions at the Market open.
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This Week’s Data
Weekly mortgage applications fell 3.4% while purchase applications were down 1.0%.
The May Chicago PMI came in at 50.4 versus consensus of 57.5.
April pending home sales declined 1.3% versus expectations of a 0.5% increase.
The May ADP private payroll report showed a gain of 79,000 jobs versus estimates of a 7,000 decline.
Weekly jobless claims rose 13,000 versus projections of a 5,000 increase.
One more look at durable goods (medium):
What the demise of oil could look like (medium):
The bubbles in unfunded pension liabilities and government promises/entitlements (medium):
Crude oil prices drop as OPEC compliance wans (short):
More on auto loans (medium):
Why people prefer unequal societies (short):
Comey to testify (short):
International War Against Radical Islam
Are we fighting or creating terrorism? (medium):
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