Tuesday, March 13, 2018

The Morning Call---Technicals still tricky

The Morning Call


The Market

The indices (DJIA 25178, S&P 2783) couldn’t successfully challenge its prior high yesterday.  Not that it won’t occur today.  But as of this moment, the very short term momentum remains down. Volume was down, remaining at a low level.  Breadth was mixed.  That said, the Averages are above both moving averages and within uptrends across all major timeframes. The technical assumption is that long term stocks are going higher.  However, the indices are now stuck in a narrowing range defined by lower highs and higher lows.  In addition, they need to overcome their former all-time highs before we have an all clear signal. 

The VIX was up 7 ¾ %, but still ended below the lower boundary of its short term uptrend for a third day, resetting to a trading range.   This pin action may be anticipating a drop in volatility, which would be a plus for stocks.
The long Treasury rose ½ %; quite a good performance on a day of a large series of Treasury offerings.  Nonetheless, momentum remains to the downside.

            And, Fed admits yield curve collapse matters:

                And, strong Treasury auction:

The dollar was off again, seemingly unimpressed with the positive Treasury offering.  It remains an ugly chart.
GLD was flat.  Momentum remains to the upside, but it must still overcome a very short term downtrend.
Bottom line: the technicals of the equity market point higher for the long term; though on a very short term basis Monday’s pin action was disappointing.  TLT, UUP and GLD drifted aimlessly.


            Yesterday was a slow day.  The only data release was the February budget deficit which was a big number but in line with forecasts.  The only other newsworthy item was the better than anticipated reception of the large Treasury auction mentioned above.
            Bottom line: the federal budget is out of control, the Fed refuses to take control, Trump is in control, and I am just not sure exactly how positive that is.  Stocks are overvalued.  I love the cash I own.

            Private equity firms brace for a selloff (medium):

            The latest from Jim Grant (medium):

    News on Stocks in Our Portfolios


   This Week’s Data


            The February US budget deficit was $215.2 billion versus expectations of $216.0 billion.

                The February small business optimism index was reported at 107.6 versus estimates of 107.0.

                February CPI came in at +0.2%, in line; ex food and energy, it was up 0.2%, also in line.



            Trend in new home sale prices (medium):

            The great jobs collision (medium):

            The Fed and interest rates.  I don’t agree with this guy; but I include the article in the interest of providing all points of view (medium):

            BIS warns of risks in banking system (medium):

            Is the US economy becoming more stable?  This is a recurring theme with this author.  I am not sure I agree; but his thesis bears consideration (medium):

            Goldman on a global trade war (medium):

            Is global synchronized growth ending?---assuming it ever started (medium):

What I am reading today

            Coercion and abuse inside the Riyadh Ritz Carlton (medium):

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