Monday, February 12, 2018

Monday Morning Chartology

The Morning Call

2/12/18

The Market
         
    Technical

            At least I have something to talk about for the first time in almost a year.  Friday, the S&P bounced off its 200 day moving average and ended above Thursday’s lower low; that is the good news.  However, it failed to recover above its 100 day moving average and has resistance from the upper boundary of a newly developed very short term downtrend; that is the bad news.  At the moment, there is really nothing to do but watch how the current bout of downside volatility works itself out.  However, the bottom line hasn’t changed: very short term the trend is down; long term, there is hardly a reason to question the uptrend.



            The long Treasury (117) continues to decline.  TLT has resistance from both moving averages and the short term trend.  The only support left is the lower boundary of its long term uptrend; and that is less than one point away.  If successfully challenged, it will negate a multi decade’s long uptrend and set up trading range with a lower boundary of 90.



            The dollar is trying to rally as interest rates rise; however, to date, it has been a meek effort on falling volume.  Not exactly encouraging if you are a dollar bull.



            GLD got hit like other asset classes last week.  Relatively, it did OK and remained above its moving averages, in a short term uptrend and seems to be trying to stabilize.  However, it is nearing the lower boundary of that short term uptrend, a breach of which could be critical.



            I don’t know how to construct a reasonable analysis of a chart like this.  The VIX seems to have found a new, much higher level at which to trade.  But it has only been there for a short time.  So time (follow through) is going to tell us if it will hold.  But at this moment, the VIX is suggesting that, at the very least, we are in store for a lot more volatility with a better than even chance it will be to the downside.



    Fundamental

       Headlines

            The January dividend stats (short):
           
            The Donald will release his FY2019 budget today, dropping all pretense of a balanced budget (medium):
   
News on Stocks in Our Portfolios

 General Dynamics (NYSE:GD) has agreed to acquire all outstanding shares of CSRA for $40.75 in cash, valuing the transaction at $9.6B, including debt.
The deal is expected to be accretive to General Dynamics' GAAP earnings per share and to free cash flow per share in 2019, as well as generate an estimated annual pre-tax cost savings of approximately 2% of the combined company's revenue by 2020.
Economics

   This Week’s Data

      US

     International

    Other

            Rig count soars as oil plummets (short):

What I am reading today

            The problem with emotions (medium):

            Dealing with historically abnormal markets (short):

            $20 billion hidden in the swamp (medium):

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