The Morning Call
1/20/15
The Market
Technical
Tuesday Morning Chartology
I
don’t need to present some chart for you to know that volatility reigned
supreme last week; so much so that any technical conclusion at the end of any
given day had to be looked at with askance.
That applies to these comments.
That said, the S&P broke out of its developing pennant formation on
Wednesday, traded below the prior higher low on Thursday then rallied back to
the lower boundary of the pennant pattern on Friday. There are both positive (the initial break of
the lower boundary of the pennant formation was a false flag) and negative
views (not one but two support levels were broken; plus Friday’s move was
influenced by options expiration and short covering before a long weekend) of
this pin action. What this all means is
that I am confused and when confused, the best thing to do is nothing.
TLT
is clearly on a moon shot, pushing above the upper boundaries of both its short
and intermediate term uptrends. The good
news is that our muni bond holdings in the ETF Portfolio have tagged
along. The bad news is that prices are
so stretched that some consolidation seems likely to occur. Of course, that is a technical judgment; and
TLT prices are being driven up by some scary fundamental factors; so that
consolidation maybe a time in coming. I
wouldn’t be chasing bond prices up.
This
sure looks like a bottom to me. However,
patience. If GLD remains above the upper
boundary of its short term trading range on the close Tuesday, the trend
re-sets to up. If it is above the upper boundary
of its intermediate term downtrend on Wednesday, that trend will re-set to a
trading range. If that occurs, our
Portfolios will likely start to nibble.
The
VIX played with the upper boundaries of its short term trading range and
intermediate term downtrend all last week, but ended below both. That is modestly positive outcome. Of course, it is still quite near both, so
conditions can change on short notice.
Fundamental
Over
the holiday:
(1) the Shanghai
Composite was down over 7% as officials suspended three broker/dealers for
margin finance and securities lending violations. Last night, China reported 2014 GDP growth at
7.4%, the slowest in 24 years,
(2) Denmark
lowered its central bank rate and the Turkish PM said that Turkey’s central
bank will lower their rate tomorrow; and, of course, global markets are giddy
over a large ECB QE announcement on Thursday,
But
will it work? (4 minute video):
(3) the IMF lowered its
global GDP growth estimates for 2015 and 2016,
(4)
fighting has resumed in Ukraine.
More
fallout from the Swiss franc revaluation (medium):
The
latest from Societe Generale (medium):
Investing for Survival
New
Year’s resolution: review or create an estate plan (medium):
News on Stocks in Our Portfolios
·
Revenue of $18.25B (-0.6%
Y/Y) misses by $310M.
Economics
This Week’s Data
Other
The latest developments
in oil (medium):
Politics
Domestic
Holder ends
civil asset forfeiture. Give that man a
cigar (medium):
International War Against Radical Islam
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