As long time readers know, I am
an avid OU fan. Tomorrow is the Oklahoma/Texas
game. That means lots of friends arrive
today and a party tonight. Unfortunately
for an old guy, the game starts at 11AM Saturday which means the bus leaves at
9AM which means the Saturday edition of the party starts really early---either
that or it just doesn’t stop. In any
case, this is a long winded way of saying that there will be no Closing Bell
this week. Boomer, Sooner.
The Market
Technical
The
indices (DJIA 13325, S&P 1432) were basically flat on the day (Dow down,
S&P up). This is the second day the
DJIA finished below the lower boundary of its short term uptrend (13366-14197). It remains above the (1) 13302 support level,
(2) the 50 day moving average (13302) and (3) the lower boundary of its
intermediate term uptrend [12521-17521].
The
S&P remained right on the lower boundary of its short term uptrend
(1432-1524); but above (1) its 50 day moving average [1425] and (2) the lower
boundary of its intermediate term uptrend [1321-1919].
Volume
was weak; breadth mixed. The VIX was
down, closing within the broad zone between the upper boundary of its short
term downtrend and the lower boundary of its intermediate term trading range. I read this as neutral.
GLD
rose modestly, remaining above (1) a secondary support level [168.4], (2) the
lower boundary of its short term uptrend and (3) the lower boundary of its
intermediate term trading range.
Bottom
line: the challenge to the lower boundary of the Dow’s short term uptrend
continues while the S&P remains poised to mount its assault on its
comparable boundary. I mentioned
yesterday that both were near several support levels, so that a bounce would
not be surprising. It looked like that
was going to occur in yesterday’s early trading; then later in the day, prices
declined to finish at or below Wednesday’s close. That pin action could hardly be characterized
as a ‘bounce’; indeed, it only served to work off an oversold position. So my guess is with a little push, the
Averages will resume their challenges.
The Market’s
internal structure continues to weaken (see below). I have noticed an increasing number of stocks that have spiked to new highs,
then instead of holding those heights, have immediately reversed
direction. That is not positive price
action. So I believe that we will see
lower prices near term and accordingly I remain focused on our Sell Discipline.
Optimism
at a 10 week low (medium):
Retail
investors continue to head for the exits (short):
Market
performance in October (short):
Fundamental
Yesterday’s
economic data was mixed to positive: the August trade deficit was larger than
expected; on the other hand, weekly jobless claims fell a lot---although this
number was tainted by some problems in the data collection.
And
some analysis of the traded deficit (medium):
When the
headline jobless claims figure was reported that put a lift under the
Market. The remainder of the day, stocks
gave up most of this initial bit of euphoria as (1) the problem with the
jobless claims figure got hashed out, (2) concerns about third quarter earnings
suppressed investor enthusiasm and (3) the whackage in the tech sector continued.
Why
the IMF is so wrong (medium):
The
central bank ‘put bubble’ (medium and today’s must read):
All
we know may be invalid (medium):
The
resurgence of junk bonds (short):
CDS
markets suggest more credit downgrades are coming (short):
Bottom
line: while stock prices are only
modestly overvalued, if you read any of the above articles, to say nothing of
all of them, then you can appreciate why I am concerned that the downside to
stocks may be more than just a return to Fair Value. That leaves me focused on our Sell Discipline
and our GLD position. That said, I think
that a retreat of any consequence will provide a Buying opportunity.
Investing for Survival
What
assets to own in an environment of rising inflation (medium):
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