The Morning Call
8/3/15
The
Market
Technical
Last
week, the Dow was unable to recover above (1) its 100 day moving average,
re-setting it from support to resistance and (2) the lower boundary of its
intermediate term uptrend, re-setting it to a trading range. It also rebounded above the lower boundary of
its short term uptrend, voiding the break, and then broke it again on
Friday. If it remains there through the
close on Tuesday, the short term trend will re-set from up to a trading range.
In
the meantime, the S&P traded back above the lower boundary of its short
term uptrend (negating the break) and its 100 day moving average (leaving it as
support versus resistance). Clearly the
Averages are out of sync. Their task is
now to return to harmony.
The
TLT finished the week right on its 100 day moving average and a short hair from
the upper boundary of its short term downtrend.
That pin action suggests that the economy may be weakening.
GLD’s
chart remains a mess. It is now in
downtrends in every imaginable timeframe.
There is likely a bottom here somewhere; but it would be foolish to try
to pick it.
The
VIX is again near the bottom of a trading range that goes back to August
2014---a level that represents value as portfolio insurance. The Aggressive Growth Portfolio will Buy a
2.5% trading position in VXX at the Market open, with a very short stop.
Secular
bull and bear markets (medium):
Fundamental
Headlines
Just
to summarize last week’s events:
(1)
the economic data in volume was negative; primary indicators
were balanced,
(2)
the Fed did another of its best impressions of a wimp [dovish],
(3)
Chinese investors frustrated the powers that be by
taking their market down despite monetary injections,
(4)
the Greek bailout ran into a snag as the IMF support
wobbled and Tsipras is contemplating whether or not to have yet another
referendum on the Troika’s bail out terms.
http://www.zerohedge.com/news/2015-08-03/greek-stocks-economy-collapse-suffer-worst-declines-history
In short,
nothing to suggest an improved economic/geopolitical backdrop for stock prices.
Hilsenrath
on the Fed on a September rate hike (medium):
***overnight,
the July Markit EU PMI came in above expectations but still below June’s
reading; the July Chinese PMI was down, in negative territory, for the fifth
month in a row; Chinese officials suspended trading by Citadel, a US hedge
fund.
Economics
This Week’s Data
June
personal income rose 0.4% versus expectations of up 0.3%; personal income was
up 0.2%, in line.
Other
Freight
rates from China to Europe down big (medium):
Politics
Domestic
International War Against Radical Islam
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