The Morning Call
The Market
Technical
The
indices (DJIA 15518, S&P 1697) declined yesterday. The Dow traded back below the upper boundary
of its former short term trading range one day after confirming the break. Usually when this occurs, it gives reason for
pause. After all, the length of time
element of our time and distance discipline was set outside the second standard
deviation of historical experience.
Meaning that roughly 90% of all breaks of short term trends are
confirmed broken after three trading days---so 10% are ‘false breakouts’.
However, right
now, I am not going to reverse my call because not all these ‘false breakouts’
mark the end of a trend. For example,
two weeks ago exactly the same thing occurred with the S&P, i.e. it broke
out of its short term trading range, was confirmed, fell back below the upper boundary one day
after the confirmation, bounced back and forth around the upper boundary for
another week, then plowed ahead.
Bottom line,
this pin action puts us on alert, suggests that it is unwise to make any
further upside bets until we get a better confirmation of a break or a
rejection and makes the Market uptrend call a bit iffy.
All that said,
the S&P remained within its short term uptrend (1611-1767) and both of the
Averages well within their intermediate term (14498-19498, 1544-2132) and long
term uptrends (4918-17000, 715-1800).
Volume rose a
bit but breadth was terrible. The VIX
bounced hard from below the lower
boundary of its short term trading range, invalidating Monday’s break.
GLD took it in
the snoot. The chart is turning ugly
again and warns us to stay away.
Update
on ‘the best stock market indicator ever’ (now untradeable):
Fundamental
Monday
night, we got more good economic news out of Europe . Yesterday, good news was bad news
(‘tapering’) and as a result stocks got whacked:
To make matters
worse (?), we received our own good datapoints and that only made things worse:
Then two Fed
governors allowed as how ‘tapering’ could and perhaps should start early. And you wonder why Markets are confused and
losing faith in the Fed.
Even though I
believe stocks are overvalued and that Fed policy is apt to end in considerable
pain, I am not getting jiggy about one day’s pin action. Investors have been flipping and flopping
about whether better economic news is good news or bad news and what the Fed’s policy is or isn’t for at
least a month; and I doubt that we will witness a serious move in stocks in
either direction until they decide.
Subscriber Alert
Nu
Skin Pharmaceuticals (NUS ) is trading above
the lower boundary of its Sell Half
Range
News on Stocks in Our Portfolios
Economics
This Week’s Data
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40% of student loans are current (short):
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more problems for the big banks (short):
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