Monday Morning Chartology

The Morning Call

3/31/14

The Market

           

    Technical

     Monday Morning Chartology

            The S&P followed a set pattern last week, ramping higher in the morning, then trading lower through the rest of the day.  In the process, it made a lower high and a higher low, usually indicative of open battle between the bulls and bears.  One of two things will occur this week: either it trades in a very tight range violating neither the recent high nor the recent low or it breaks one way or the other.  If I had to bet, I would say the break is likely to come on the upside; but I don’t have to bet.

            The long Treasury traded down on Friday.  It closed above the upper boundary of its short term trading range.  Under out time and distance discipline that was sufficient to negate the trading range and re-set it to a short term uptrend.  In the chart I have redrawn the short term uptrend.  However, Friday’s pin action was big enough on the downside that I am going to defer re-setting the short term trend until the close today.

            GLD had a rough go of it last week, breaking its very short term uptrend.  It is now in a short term and intermediate term downtrend and finished below its 50 day moving average.

            The VIX continues to be of little value in assessing Market direction.  It remains stuck in a yearlong short term trading range as well as an intermediate term downtrend and closed above its 50 day moving average.

            From the Sentiment Trader:

Active investment managers have continued their extreme exposure to stocks. Even the most bearish manager is net long stocks, according to the National Association of Active Investment Managers. This week's data show the average exposure, spread between most bullish and most bearish managers and confidence among all managers is at extremes seen only two other times in the 8-year history of the survey. Those were early January 2007 and early January 2014. Both times proved to be somewhat troublesome for the most bullish managers in the weeks ahead.

Update on NYSE margin debt (short):

http://advisorperspectives.com/dshort/updates/NYSE-Margin-Debt-and-the-SPX.php

            Update on ‘the best stock market indicator ever’ (short):

            http://advisorperspectives.com/dshort/guest/John-Carlucci-Best-Indicator-Ever-Update.php

    Fundamental

    

            Shiller on bubbles (short):

            http://www.thereformedbroker.com/2014/03/28/robert-shiller-bubbles-are-a-good-motivator/

            Will profit margins mean revert? (short):

            http://blog.yardeni.com/2014/03/is-profit-margin-set-to-revert-to-mean.html

           News on Stocks in Our Portfolios

 

Economics

   This Week’s Data

   Other

            Japan get double whammy (short):

            http://www.zerohedge.com/news/2014-03-30/double-data-whammy-japan-pmi-tumbles-industrial-production-misses-most-abenomics

Politics

  Domestic

Lowry on Obamacare (medium):

http://www.nationalreview.com/article/374403/obamacares-master-false-assurance-rich-lowry

  International

            New report coming on global warming (medium):

            http://www.coyoteblog.com/coyote_blog/2014/03/we-are-all-lukewarmers-now.html

            Condi Rice on Obama’s foreign policy (medium):

            http://www.weeklystandard.com/author/stephen-f.-hayes

            Krauthammer on Obama’s foreign policy (medium):

            http://www.washingtonpost.com/opinions/charles-krauthammer-obama-vs-putin-the-mismatch/2014/03/27/e26a27f2-b5d5-11e3-8cb6-284052554d74_story.html

            Over the weekend (medium):

            http://www.zerohedge.com/news/2014-03-28/china-germany-sign-yuan-settlement-pact-and-obama-heads-saudi-arabia

                Stephan Roach on Chinese central planning (medium):

            http://www.zerohedge.com/news/2014-03-28/china-germany-sign-yuan-settlement-pact-and-obama-heads-saudi-arabia

            Bank loan write offs soar at Chinese banks (medium):

            http://www.ft.com/intl/cms/s/0/fa1dab34-b824-11e3-92f9-00144feabdc0.html?siteedition=intl#axzz2xUCrQuPB

                        China also fighting corruption (medium):

            http://www.zerohedge.com/news/2014-03-30/china-confiscates-billions-ugliest-corruption-scandal-history

Steve Cook received his education in investments from Harvard, where he earned an MBA, New York University, where he did post graduate work in economics and financial analysis and the CFA Institute, where he earned the Chartered Financial Analysts designation in 1973. His 40 years of investment experience includes institutional portfolio management at Scudder, Stevens and Clark and Bear Stearns. Steve's goal at Investing For Survival is to help other investors build wealth and benefit from the investing lessons he learned the hard way.