The Morning Call
8/5/15
The
Market
Technical
The indices
(DJIA 17550, S&P 2093) fell again yesterday. The Dow is [a] below its 100 and 200 day moving
averages, both of which now represent resistance, [b] below the lower boundary of
its short term uptrend for the third day, thereby re-setting to a trading range
{17385-18295}, [c] in an intermediate term trading range {15842-18295} and [d]
in a long term uptrend {5369-19175}.
The S&P closed
below its 100 day moving average and the lower boundary of its short term
uptrend; if it remains there through the close on Thursday, the 100 day moving
average will revert to resistance and the short term uptrend will re-set to a
trading range. It remains, for the moment,
in uptrends across all timeframes (2095-3074, 1878-2644, 797-2145).
Volume rose;
breadth was mixed. The VIX was up, but
is still below its 100 day moving average and remains within a short term
trading range, an intermediate term downtrend and a long term trading range.
The long
Treasury fell. It closed back below the upper
boundary of its short term downtrend, voiding Monday’s break. However,
it remained above its 100 day moving average which will revert from resistance
to support at the close today. It continues
within a very short term uptrend.
GLD was up,
remaining below its 100 day moving average and in downtrends across all
timeframes.
Oil was up, but
still finished below its 100 day moving average and within short and
intermediate term downtrends. The dollar also rose, remaining above its 100 day
moving average and within short and intermediate term trading ranges.
Bottom line: the
Averages technically deteriorated further yesterday. The S&P is in a lot better shape than the
Dow; and being more reflective of the Market in general, leaves open the
possibility that a bounce could occur that would negate all the damage and
re-sync the Dow with the S&P to the upside.
That said, with the Dow having already re-set both its short and
intermediate term trends, which is going to take a lot of work. Patience.
Fundamental
Headlines
Yesterday’s
US economic data was sparse but mildly positive: month to date retail chain
store sales were up versus the prior week and June factory orders were slightly
better than anticipated.
Also
in the news, the Atlanta Fed chief, considered a moderate, indicated that he
would vote for a rate hike in September.
The
international news was a bit more interesting:
(1)
the Chinese government imposed additional restrictions
on short sellers,
How banning short selling has worked in the past (short):
(2)
July UK construction spending declined,
(3)
Japanese real wages fell the most in six years.
Abenomics fails again (medium):
***overnight,
July Chinese services PMI rose while June EU retail sales declined.
Bottom line: evidence
of failing central government top down policy just keeps on coming. Obama’s new energy policy which will lay off
thousands of coal miners and force the US taxpayer to finance a 0.001% (Charles
Krauthammer’s estimate) reduction in global air pollution; the Fed is clueless;
China struggles to control its stock market; Japan’s extra super-duper
QEInfinity is crushing the Japanese workingman; the Troika is forcing Greece
into serfdom.
It has been and
remains a huge credit to the strength of US industry and labor to have been
able to overcome such onerous government interference in the global
economy. That said, there is only so much
that can be done. The recent downgrade
in our US economic growth rate forecast is a reflection of just how difficult
the ruling class has made the business environment. But as Herb Stein said, when a trend can’t
continue, it won’t.
I continue to 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.
A
thought on second quarter earnings (short):
Another money manager
turns negative (medium):
Economics
This Week’s Data
Month
to date retail chain store sales rose nicely from the prior week.
June
factory orders were up 1.8% versus expectations of up 1.7%.
Weekly
mortgage applications rose 4.7% and purchase applications were up 3.0%.
The
July ADP private payroll report showed an increase of 185,000 jobs versus
estimates of rise of 210,000.
The
June US trade deficit was $43.8 billion versus forecasts of $43.0 billion.
Other
Here
is a really interesting thought on investment spending (short):
Politics
Domestic
One man’s
crusade to raise the minimum wage (medium):
Student loans
are making higher education more expensive (medium):
Another planned
parenthood video (15 minutes):
International War Against Radical
Islam
Russia
is prepared to send troops to Syria (short):
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