The Morning Call
The Market
Technical
Typical of the
recent trading pattern (up, down, up, down) of the Averages (DJIA 14613,
S&P 1563), prices were up yesterday leaving them within all uptrends: short
term (13931-14622, 1525-1599), intermediate term (13655-18655, 1448-2042) and
long term (4783-17500, 688-1750).
However, they remain out of sync on surmounting their all time highs---the Dow
having done so (14190), the S&P not (1576).
Volume fell;
breadth improved. The VIX was down, finishing
within its short and intermediate term downtrends.
GLD
declined, closing within its short term downtrend; but remaining above the (now
in dispute) support level.
Bottom line: stocks
prices remain in an uptrend. The
question is, is that coming to an end?
Given that all uptrends remain in tact, why would there even be a
question? Market internals are
weakening, the S&P hasn’t even challenged its former all time high and the
upward momentum in the DJIA is slowing.
So there are some telltale signs of a topping process.
That said, this
will remain a hypothetical until the aforementioned uptrends start breaking
down. I stay cautious with emphasis on
the sell side.
Fundamental
Headlines
No
economic news yesterday. Indeed, it was
a generally quiet day on most fronts.
Most of the media pundits argued about valuation. And I think that is appropriate; which is to
say that the key points of the fundamentals seem to have garnered a rough
consensus: the economy is improving albeit grudgingly, the global central banks
are printing money as fast as humanly possible and the eurocrats haven’t yet
grasped the dangers of a circular firing squad.
Bottom line:
This issue is what is the above worth? I
think it less than current levels, others don’t. Plus I am concerned about the tail risks
associated with massive central bank intervention and continuing eurocrat
circle jerk attempts to deal with the continent’s sovereign and bank
insolvencies.
This
is a great article on the progress the ‘sick’ euro countries are making in
recovery and why the risk of a crisis is diminishing. I have to think about this; but on the
surface, his argument makes sense. I may
have to scale back the magnitude of the tail risk associated with another EU
crisis. (medium and today’s must read):
I
remain quite happy with our cash position.
Cramer
on the bid under the Market (medium):
Are
dividend paying stocks really a good alternative to bonds (medium):
Update
on Citi’s economic surprise index (short):
Bail
out versus bail in (medium):
Blackrock
calls for Fed to rein in QEinfinity (medium):
Investing for Survival
One thing that
did make news today was this gem from the president (short):
This
may have prompted His suggestion (short):
Or
maybe it was this: (short):
Worried
about your savings yet?
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