The Morning Call
12/9/14
The Market
Technical
The
Dow (17812) closed above its 50 day moving average and within uptrends across
all timeframes: short term (16184-18930), intermediate term (16157-21122) and
long term (5369-18960).
The S&P (2060)
finished back below the upper boundary of its long term uptrend (783-2071);
that negates last week’s break and leaves it within the long term uptrend. It also closed within its short term (1866-2230)
and intermediate term (1709-2425) uptrends and above its 50 day moving average.
Volume was up; breadth
was poor. The VIX bounced hard off the lower boundary of its recently re-set
short term trading range, remaining within that range as well as within its intermediate term downtrend and below
its 50 day moving average.
Update
on sentiment (short):
The long
Treasury spiked yesterday, ending above the upper boundary of it very short
tern trading range; a finish above that level at the close today will re-set the
trend to up. It ended within a short
term uptrend, very near the upper boundary of its intermediate term trading
range and above its 50 day moving average.
GLD moved back
above the lower boundary of its former long term trading range and its 50 day
moving average. Still it remains within
downtrends across all timeframes. So it continues to be unresolved whether the
initial break below the lower boundary of its long term trading range was real
or a false flag and whether that boundary will end up marking the effective
bottom for GLD. Although the
preponderance of technical evidence suggests that the break was real.
Bottom line: the
S&P’s initial challenge of the upper boundary of its long term uptrend was
unsuccessful. However, I would expect
more of them; so I don’t think that this is a sign that the Market is rolling
over.
TLT has
challenged the upper boundary of its very short term trading range and appears
about to challenge the upper boundary of its intermediate term trading range. GLD
is struggling with the former lower boundary of its long term trading range;
the VIX has just re-set to a short term trading range.
So the battle of
trends continue; how they get resolve should be a decent tell on near term
Market action and could very well signal unfolding economic trends (e.g. bonds rallying
does not bode well for stocks or the economy).
Fundamental
Headlines
No
US economic data releases yesterday, though we did receive more bad
international economic news: the Japanese GDP fell 1.9% in the third quarter;
October German industrial output was below expectations and China experienced a
record trade deficit in November. Sooner
or later this negative dataflow has to yield to more positive results or I just
don’t see how the US escapes the malaise.
Oil
(prices) continued to dominate investor attention as it took another downward
spiral. Pundits are now talking
$40/barrel and virtually all of them believe that this will be a big plus for
the consumer---the lower, the better. I
have doubts but we won’t know until it happens.
And (short):
Finally,
it is government funding time again with a Thursday deadline. Given our elected representatives prior
performance, it is not surprising that many are a bit nervous that a shutdown
could occur. However, the republicans
have vowed that this won’t happen. What
takes place, I think will be an early sign on how they intend to govern.
***overnight,
the IRS accused Deutschebank of failing to pay $190 million in taxes, China
tightened its collateral rules for security purchases while the major banks
raised the rates on time deposits (so much for the rumored monetary easing) and
Germany’s imports and exports came in lower than estimates.
Bottom line: the
potential problem of the absence of growth in the rest of the world is getting
no better. The US has fought that trend
to date; but at some point something has to give. Further, plunging oil prices are---still
plunging. My opinion is that many are
diluting themselves assuming nothing but good will come of it, if it continues. I am not saying that it won’t, I am saying
that there is enough evidence that during past oil price declines, disruptions
occurred and hostilities within OPEC rose.
I can’t believe that Putin and the ayatollah will sit idly by why the
price of oil goes to $40 a barrel---and those guys can cause disruptions if
they put their minds to it.
I
can’t emphasize strongly enough that I believe that the key investment strategy
today is to take advantage of the current high prices to sell any stock that
has been a disappointment or no longer fits your investment criteria and to
trim the holding of any stock that has doubled or more in price.
Bear
in mind, this is not a recommendation to run for the hills. Our Portfolios are still 55-60% invested and
their cash position is a function of individual stocks either hitting their
Sell Half Prices or their underlying company failing to meet the requisite
minimum financial criteria needed for inclusion in our Universe.
Investing for Survival
Nine
things Jesse Livermore said (medium):
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