The Morning Call
The Market
Technical
The
indices (DJIA 15900, S&P 1781) continued to rest yesterday, closing down
modestly on the day; but remaining within uptrends across all time frames:
short term (15339-20339, 1723-1877), intermediate term (15339-20339, 1633-2215)
and long term (5015-17000, 728-1850).
Volume
was flat; breadth mixed. The VIX was up
but much less than I would have thought.
It finished within a very long short term trading range (hence providing
little guidance on Market direction) and an intermediate term downtrend.
A
different take on breadth (medium and a must read):
The
long Treasury got whacked, reflecting the confusion that came from the latest
Fed minutes. For the moment, it remains
in a short term trading range and an intermediate term downtrend.
GLD
also took it in the snoot, reinforcing the technical notion that the direction
of a break from a pennant pattern generally portends future price
movement. It closed within short and
intermediate downtrends.
Bottom
line: the Averages remain on hold either
building strength for another test of 16000/1800 or churning through a few
remaining buyers before rolling over. I
can’t believe that the bulls buying power has faded sufficiently that another
attempt at 16000/1800 isn’t in the cards.
Indeed, even many long term bears think that any rollover in securities
prices will be preceded by a blow off top.
That said, the
technicals continue to weaken; and, were I a trader, that would make me very
skittish about playing for another move to the upside.
My
recommendation continues to be to take advantage of the current high prices and
any additional move to the upside to sell any stock that has been a
disappointment and to trim the holding of any stock that has doubled or more in
price.
If one of our
stocks trades into its Sell Half
Range
Fundamental
Headlines
We
got a lot of US economic datapoints yesterday, mostly positive though there
were a couple bad numbers: weekly mortgage applications were down but the all
important purchase applications rose nicely, October CPI
was very tame, October retail sales were better than expected, September
inventories were up but unfortunately business sales were down and existing
home sales dropped but that was anticipated.
An
in depth look at retail sales (medium):
That
gave a positive bias to early trading, though spiking interest rates in China
and caution in front of the release of the minutes of the latest Fed meeting
kept enthusiasm under wraps.
And Hilsenrath’s take
(medium):
More on student loans
(medium):
QE and the deficit
(short):
Bottom
line: my take is one that I have already put forward. The Fed knows that it has its dick stuck in a
wringer (i.e. its balance sheet has reached an untenable level) and it has no
clue, no clue how to extricate itself.
So it spends its time fiddling over angels dancing on a pin’s head while
Rome burns (to mix metaphors).
Given the
Market’s reaction, it supports my thesis that sooner or later investors will likely
take matters in their own hands, drive long rates up to a level that the Fed
will have no choice but to follow---the operative words being ‘my thesis’ and
‘sooner or later’. So we just have to
wait and see if the consternation expressed in yesterday’s Market reaction has
any follow through. If there is, then
stocks are probably not going to do well.
Can
the Dow make and hold 16000? (medium):
The
role of luck in investing (short):
For
the bulls (medium):
Goldman’s
outlook for 2014 (long):
Investing for Survival
Making
your own investment policy statement (medium and a must read):
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