The Morning Call--Momentum is still up

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The Morning Call

1/9/13

The Market

           

    Technical

            The indices (DJIA 13328, S&P 1457) slipped again yesterday, but remain within their short term uptrends (12967-13613, 1407-1475) and their intermediate term uptrends (13099-18099, 1385-1980).  This pin action continues to have all the characteristics of the normal digestive process after a major move up.

            Volume rose; breadth was mixed.  The VIX finished below the lower boundary of its intermediate term trading range for the third day.  If it closes today below that boundary, the break of the intermediate term trading range will be confirmed and re-set to a downtrend---very positive for stocks.

            GLD rose but remains well within its short term downtrend and intermediate term trading range.

            Bottom line: almost no technical damage has been done the last two days, so the momentum remains to the upside.  Any move to higher prices will prompt additional sales by our Portfolios.

            The world is overbought:

            http://www.bespokeinvest.com/thinkbig/2013/1/8/the-world-remains-overbought.html

    Fundamental

    

     Headlines

            Small business confidence improved in November, though its current level is still not that encouraging; and consumer credit jumped but it was largely on the back of student loans---which I have argued for some time is a disaster waiting to happen.  So the news was mixed at best.  But mixed is about all I need to have the economy match our forecast.

            Other than those little tidbits (little being the operative word), investor focus yesterday was on (1) the continuing monologue from the punditry on 2013 outlook, (2) early maneuvering on the debt ceiling talks, (3) Obama’s nominees for defense, treasury and the CIA [see below] and (4) the upcoming earnings season which started last night with Alcoa’s aftermarket release [in line with slightly better guidance].  All in all, pretty thin gruel after the non-stop bop that we have just been through with the fiscal cliff. 

            Bottom line: of course, there is nothing wrong with some peace and quiet, particularly with the whole debt ceiling/sequestration/spending cut debates that lie ahead.  The only thing likely to alter that pensive mood over the next couple of weeks would be poor, unexpected profit reports.  On that score, most of the forecasts for the year that I have seen are a bit more optimistic than our own; though most everyone also seems to recognize that the fourth quarter 2012 results will be nothing to write home about---so I am not anticipating disappointment.

That should keep volatility low and a bid under the Market.  However, with stocks already overvalued, our Portfolios will remain on the sidelines.

            The latest from Marc Faber:

            http://pragcap.com/marc-faber-deeply-uncomfortable-about-the-equity-market

            The latest from Felix Zulauf (medium):

            http://advisorperspectives.com/dshort/guest/FMS-Interview-with-Felix-Zulauf.php

The Morning Call

1/9/13

The Market

           

    Technical

            The indices (DJIA 13328, S&P 1457) slipped again yesterday, but remain within their short term uptrends (12967-13613, 1407-1475) and their intermediate term uptrends (13099-18099, 1385-1980).  This pin action continues to have all the characteristics of the normal digestive process after a major move up.

            Volume rose; breadth was mixed.  The VIX finished below the lower boundary of its intermediate term trading range for the third day.  If it closes today below that boundary, the break of the intermediate term trading range will be confirmed and re-set to a downtrend---very positive for stocks.

            GLD rose but remains well within its short term downtrend and intermediate term trading range.

            Bottom line: almost no technical damage has been done the last two days, so the momentum remains to the upside.  Any move to higher prices will prompt additional sales by our Portfolios.

            The world is overbought:

            http://www.bespokeinvest.com/thinkbig/2013/1/8/the-world-remains-overbought.html

    Fundamental

    

     Headlines

            Small business confidence improved in November, though its current level is still not that encouraging; and consumer credit jumped but it was largely on the back of student loans---which I have argued for some time is a disaster waiting to happen.  So the news was mixed at best.  But mixed is about all I need to have the economy match our forecast.

            Other than those little tidbits (little being the operative word), investor focus yesterday was on (1) the continuing monologue from the punditry on 2013 outlook, (2) early maneuvering on the debt ceiling talks, (3) Obama’s nominees for defense, treasury and the CIA [see below] and (4) the upcoming earnings season which started last night with Alcoa’s aftermarket release [in line with slightly better guidance].  All in all, pretty thin gruel after the non-stop bop that we have just been through with the fiscal cliff. 

            Bottom line: of course, there is nothing wrong with some peace and quiet, particularly with the whole debt ceiling/sequestration/spending cut debates that lie ahead.  The only thing likely to alter that pensive mood over the next couple of weeks would be poor, unexpected profit reports.  On that score, most of the forecasts for the year that I have seen are a bit more optimistic than our own; though most everyone also seems to recognize that the fourth quarter 2012 results will be nothing to write home about---so I am not anticipating disappointment.

That should keep volatility low and a bid under the Market.  However, with stocks already overvalued, our Portfolios will remain on the sidelines.

            The latest from Marc Faber:

            http://pragcap.com/marc-faber-deeply-uncomfortable-about-the-equity-market

            The latest from Felix Zulauf (medium):

            http://advisorperspectives.com/dshort/guest/FMS-Interview-with-Felix-Zulauf.php

Steve Cook received his education in investments from Harvard, where he earned an MBA, New York University, where he did post graduate work in economics and financial analysis and the CFA Institute, where he earned the Chartered Financial Analysts designation in 1973. His 40 years of investment experience includes institutional portfolio management at Scudder, Stevens and Clark and Bear Stearns. Steve's goal at Strategic Stock Investments is to help other investors build wealth and benefit from the investing lessons he learned the hard way.