The Morning Call
The Market
Technical
Yesterday,
the indices (DJIA 15326, S&P 1698) ended their five day losing streak, but
in just as subdued a fashion as the declines themselves. The Dow remained within its short term
trading range (14190-15550) and recovered above its 50 day moving average. The S&P closed within its short term
uptrend (1667-1821). This leaves the
Averages out of sync and Market short term directionless.
Both of the
Averages are well within their intermediate term (14911-19911, 1586-2172) and
long term uptrends (4918-17000, 715-1800).
Volume
declined; breadth was mixed. The VIX
rose fractionally, leaving it within a year long plus short term trading range
and its intermediate term downtrend.
The
long Treasury fell, finishing within a short term trading range and an
intermediate term downtrend.
GLD
moved lower, ending within a very short term, a short term and an intermediate
term downtrend.
Bottom line:
even though the Markets’ rallied yesterday off a five day downtrend, it was
more of a meandering recovery than a strong bounce back---very similar in
character as the downtrend that preceded it.
I am not sure if this reflects investor confusion over the current
fiscal drama being played out or if they are bored with another soap opera from
Washington that generally has the
same ending---sound and fury followed by some half assed solution that my seven
year old grandson could have fashioned in one tenth of the time. Barring the politicians doing something incredibly
stupid, this is a Market waiting for an event (third quarter earnings?).
Markets aren’t
as stupid as politicians (short):
If stocks
continue to the upside, our Portfolios will use the advance to lighten up on
any stock trading in its Sell Half
Range
More
on sentiment (short):
Fundamental
Headlines
Yesterday’s
US economic data was mixed: weekly jobless claims were better than expected,
second quarter GDP and corporate profits
were lightly below estimates and the latest Kansas City Fed manufacturing index
was a disappointment. There is nothing
to worry about here, as this week’s stats have been generally upbeat and spot
on with our forecast.
The
rest of the day was consumed mostly by (1) political rhetoric on the continuing
resolution and the debt ceiling and (2) the ongoing discussions about the real
Fed policy---it seems that the more Fed officials speak, the more confused
investors become. However, nothing
terribly important on either count.
You
know my take on both; so I am not going to be repetitive.
Bottom
line: the economy continues to meet our
Model’s expectations despite the headwinds presented by both fiscal and
monetary policy. We should collectively
be grateful for the ingenuity, hard work and creativity of American businesses
and workers for the positive results that have occurred.
Unfortunately,
the fiscal story is not likely to change until one party gains full control of
the White House and congress. Too much
spending, taxes and regulation will continue to act as a governor to
growth. Monetary policy just keeps
getting worse and with it, the odds of a mishap not reflected in our Economic
Model.
The good news is
that our price discipline has pushed our Portfolios out of mispriced assets and
into cash.
.......in my opinion, stocks are way over valuing the likely
earnings that can be produced from an economy on the current trajectory of the US
Central
banks and politics (medium):
The
true cost of QE (medium):
Investing for Survival
Governments
around the world are starting to adopt the Cyprus
‘bail in’ model, i.e. confiscate depositor funds (medium and today’s must
read):
No comments:
Post a Comment