The Averages (DJIA 25583, S&P 2857) were off slightly; again, on lower volume. Breadth weakened. They remain strong technically. In addition, the VIX is below the lower boundary of its short term trading range for a second day---a plus for stocks (if it remains there through the close today, it will reset to a downtrend). The only bit of cognitive dissonance is the Dow’s 100 DMA which remains right on its 200 DMA and moving lower.
The major technical story continues to be the pin action of TLT (increase in interest rates). Yesterday, it ended below (1) its 100 DMA, reverting to resistance and (2) the lower boundary of its long term uptrend [if it remains there through the close on Friday, it will reset to a trading range].
The dollar fell another three cents but remains in a strong technical position and appears to be confirming a move to higher rates. GLD was up but is in a solid downtrend which also points towards higher rates.
Bottom line: the Averages remain quite strong technically speaking. The assumption remains that they are going to challenge their all-time highs with the S&P only points away.
TLT’s 100 DMA reverted to resistance; and, far more importantly, it continues its challenge of the lower boundary of its long term uptrend. If successful, its pin action has potentially important negative fundamental as well as technical implications. The dollar and GLD are pointing towards higher interest rates.
Yesterday in the charts.
The sole economic release yesterday was weekly mortgage and purchase applications which were down.
Bottom line: the higher stock prices go, the more overvalued they become. Cash is an important asset to own in this environment.
News on Stocks in Our Portfolios
This Week’s Data
Weekly jobless claims fell 6,000 versus expectations of up 2,000.
July PPI was flat versus estimates of up 0.3%; ex food and energy, it was up 0.1% versus consensus of up 0.3%.
July Chinese PPI and CPI were hotter than forecast.
June Japanese machine orders fell 8.8% versus projections of -1.0%.
With all the concern over soybean exports to China, it appears our farmers are selling them to someone else (short):
Younger doctors now embracing single-payer healthcare (medium):
The lessons that the Fed ignores (medium):
What I am reading today
Update on crypto currency markets (medium):
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