The Morning Call
The Market
Technical
The
indices (DJIA 15069, S&P 1671) had a great day. The S&P had a directionally demonstrative
day, so I am leaving its short term trend as up (1648-1802). It also surged through its 50 day moving average. The Dow closed below both its 50 and 100 day
moving averages and remained within its short term trading range (14140-15550).
Both
of the Averages are well within their intermediate term (14786-19786,
1573-2159) and long term uptrends (4918-17000, 715-1800).
Volume
fell; breadth improved. The VIX declined
but continues to drift within its short term trading range (offering no hint of
direction). It is also in an
intermediate term downtrend.
The
long Treasury inched higher, but finished within its short and intermediate
term downtrends
GLD
was down slightly; but closed above both the lower boundary of a very short
term uptrend and the upper boundary of a very short term downtrend.
Bottom line:
while the technical strength of the S&P definitely improved yesterday, it
remains out of sync with the DJIA---both directionally and with respect to the
50 and 100 day moving averages.
Furthermore, much of the force behind yesterday’s price rise appears to
have been short covering---not the healthiest of reasons for a Market up
tick. That leaves the Market with no clear
short term trend. The long Treasury remains in both a short and intermediate
term downtrend---which I don’t see as a positive. I remain anchored to the sidelines. Any additional upside that pushes our
holdings into their Sell Half
Range
NASDAQ
100 breaks out (short):
Russell
2000 breaks short term downtrend (short):
Fundamental
Headlines
No
US economic stats yesterday; but there was a number of positive foreign
datapoints: second quarter Japanese GDP was
revised upward, plus Tokyo received the 2020 Olympics which investors seemed to
believe would be a major economic positive (they need to check the math on the
last four recipients before getting too jiggy); China recorded improved export
numbers and the EU reported a rise in
investor confidence.
That
got stocks off to a nice start. Then
Putin handed Obama yet another way to extricate Himself from His Syrian ‘red
line’ threat. The Russian suggested that
Syria place its
chemical warfare weaponry under the control of international authorities. Syria
(along with other international players like the UK )
enthusiastically supported this suggestion.
Kerry embraced it. Obama said
that He and Putin had been talking about such a solution all along (yeah,
right). Reid called off the Senate vote
on a Syrian resolution. And several
House members said that there was no way that the House would vote positively
for such a resolution. Forgetting
whether or not, the international community will ever be able to locate the
Syrian poison gas arsenal, all this action suggests that one way or the other,
Obama will be allowed to back out of His original threat; and investors,
rightly so, responded positively. As I
noted in Saturday’s Closing Bell, hopefully this is now a crisis passed its
peak.
Obama/Putin
come up with yet another way of wiggling out of His ‘red line’ threat (medium):
And
Syria agrees
(medium):
Bottom line: the
lessening risk of US
involvement in Syria
is positive, at least in the short term.
It keeps the US
out of a situation in which it has no strategic interest and in which any
action by our Orator in Chief could lead to escalation from powers much more
deadly than Syria . In the long run, hopefully the electorate
will realize the error of its way in putting this man and His ideological
sycophants in office in the first place and replace Him with someone with more common sense, perspective,
leadership and balls that won’t get himself and this country in the precarious
position that His Highness of Hope and Change has done.
With that behind
us (hopefully), our ruling class can turn its attention to some things really
important---like a budget resolution, addressing the debt ceiling, finding a
workable resolution to the fiscal problems caused by the FY 2014 sequestration
and implementation of Obamacare, clarifying the transition process from cheap
to tight money and replacing Bernanke.
If that sounds like a full agenda, it is. And if it raises doubts as to the willingness
and capacity of America ’s
finest to do the right thing, well, it should.
The fact is Syria
was/is an unfortunate and unnecessary distraction to the business of America . The job before our political class to right
the economic ship still lies ahead. And
if they can’t do any better than they have in the past decade, our economy will
remain mired in excessive government debt/spending, a growth stifling tax
system, a burdensome regulatory environment and a central bank that has taken
license to go to extremes that no other central bank in recorded history has
gone.
That doesn’t
mean that this country is going to hell in a hand basket. It does mean, in my opinion, that stocks are
way over valuing the likely earnings that can be produced from an economy on
the current trajectory of the US .
The
flaw in Fed policy (medium):
The
latest from John Hussman (medium):
***over night, China
reported much better than expected industrial production and retail sales;
while France ’s
industrial production number missed badly.
Goldman
questions the strength of recent EU PMI ’s
(medium):
Investing for Survival
Which
is better, investing for dividends or for total return (medium):
No comments:
Post a Comment