The Morning Call
The Market
Technical
The
moon shot continues as the indices (DJIA 15105, S&P 1632) closed within all
major uptrends (except the Dow which is above the upper boundary of its short
term uptrend): short term (14323-15267, 1573-1647), intermediate term
(13870-18870, 1472-2061) and long term (4783-17500, 688-1750).
Volume
was flat; breadth mixed. The VIX
declined, finishing within its short and intermediate term downtrends (a
positive for stocks).
GLD
rose but remains near the lower boundary of its intermediate term
downtrend. It continues within its long
term uptrend.
Bottom line: the
momentum to the upside continues relentlessly; and I have no idea what will
slow it down much less stop it. The
technical divergences and distance from Fair Value are meaningless; psychology
rules the day. One day someone will
notice that the emperor has no clothes but until that happens, prices are going
up.
My strategy continues to be to take
advantage of what I consider unwarranted optimism by lightening up on positions
when the stock price trades into its Sell Half Range
Fundamental
Headlines
Only
one secondary indicator was reported yesterday---mortgage and purchase
applications---and they were okay.
Overseas, (1) Chinese trade figures came in better than anticipated;
though the usual chorus of skeptics quickly started pounding on all the
contradictions within the data, and (2) German industrial production was higher
than expected. This continues the trend
toward better economic stats out of Europe and is
encouraging.
I
am not sure any of the above matters as prices continue to melt up. As I have noted earlier, the Market is really
the headline; and investors seem to be only too happy to chase that headline to
the upside.
Bottom
line: as wrong as I may be for being 40%
in cash right now, the question in front of me is, what is the probability of
the S&P being meaningfully lower than 1632 sometime in the next twelve
months? If it is reasonably high which I
think that it is, then it makes no sense to be committing cash at this
time.
True prices can
still go higher; but buying now assumes that I am smart enough to Buy and then
get out before stocks pass through 1632 going to the downside. I have proven to myself that I have no better
than even odds of doing so, which makes that a mediocre bet at best.
On the other
hand, the number of times that I have Sold Half of a stock position and not had
the opportunity to Buy that Half back at lower prices, I could count on one
hand. So I am sticking with the one who
brung me to this dance.
In
the long run, we are all in trouble (medium):
Junk
debt falls below 5% yield (short):
The
latest from Paul Singer and Kyle Bass (short):
Amazingly,
this article is the justification of one of the Street’s biggest bulls for
owning stocks. Note that it depends
entirely on low interest rates---which I would note are artificially low due to
the triple down, all in, balls to the
wall central bank money bash which we all know is going to end well. (must
read)
And
this from another bull (short):
Subscriber Alert
The
stock price of Western Gas Ptrs (WES ) has
traded above the upper boundary of its Buy
Value Range WES .
Pioneer
Southwest Energy Ptrs (PSE-$32) received a buyout offer from Pioneer Natural
Resources (PXD -$138) for .2234 shares of PXD . That puts the value of PSE at $30.80, i.e. a
$1.20 per share premium to the deal price; and it will likely take some time
before completion. On the other hand,
the deal could get a bump in value. So
the High Yield Portfolio will Sell one half of its position (now a premium to
its exchange value) and wait to see if the exchange value is increased. PSE is also being Removed from the High Yield
Buy List.
The
stock price of Nu Skin Pharmaceuticals (NUS -$56)
traded above the lower boundary of its Sell
Half Range Sell Half
Range
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