The Morning Call
8/19/15
The
Market
Technical
The indices’
(DJIA 17511, S&P 2096) three day advance stalled yesterday. The Dow still
ended [a] below its 100 and 200 day moving averages, both of which represent
resistance, [b] in a short term 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
finished [a] right on its 100 day moving average, negating yesterday’s break,
[b] as well as the upper boundary of a very short term downtrend, [c] within a
short term trading range {2043-2135} and [d] within an intermediate term
uptrend {1889-2651} and a long term uptrend {797-2145}.
Volume was up
slightly; breadth was negative. The VIX
was up 6%, but remained below its 100 day moving average and within a short
term trading range, an intermediate term downtrend and a long term trading
range.
The long
Treasury fell, ending [a] above its 100 day moving average, now support, [b]
within short and intermediate term trading ranges and [c] back below the lower
boundary of a very short term uptrend; if it remains there through the close
today, that trend will be negated.
GLD was down
fractionally, closing below its 100 day moving average and in short,
intermediate and long term downtrends.
However, it continues to develop a very short term trading range. That is no reason to go Buy GLD, but it
could potentially be signaling that a bottom is being made.
Oil managed to
lift a bit, but still finished below its 100 day moving average and within
short and intermediate term downtrends. The dollar rose, closing back above its
100 day moving average; if it remains there through the close on Friday, it
will revert from resistance to support.
It is also within short and intermediate term trading ranges.
Bottom line: the
S&P voided Monday’s challenge of its 100 day moving average and its very
short term downtrend, leaving it and the Dow synced to the downside---or at
least starting to resync to the downside.
Of course, it closed right on those aforementioned boundaries; so that
judgment is a day to day thing right now. Nevertheless, it does illustrate just
how difficult it is at this time get any kind of momentum to the upside.
This is not a
technical environment in which I would be buying stocks. Indeed, any move higher in prices I believe
represents a gift to allow investors to sell.
TLT is
challenging its very short term uptrend.
Any substantive break would suggest the no Fed rate hike and/or a
weakening economy crowd is losing support.
Plus I am sure it reflects an article by John Hilsenrath the said the
Fed would raise rates in September.
Fundamental
Headlines
Yesterday’s
US economic news was tilted a bit to the negative: July housing starts were up
fractionally, but building permits were down much more than anticipated; month
to date retail chain store sales grew at a slower pace than the prior week’s
reading.
Overseas,
the Chinese stock market got clocked again along with the yuan, though
ultimately the Chinese government intervened to help the yuan. Other bad news included an EU official
stating that Greek bank deposits would no longer be guaranteed after 1/1/16.
That, of course, is one guy’s statement, not a matter of policy. But still nothing to inspire enthusiasm.
China’s problems
are not going away (medium):
But
how much will they impact the US (medium):
***overnight,
China stock market sells off another 5% before government intervenes, closes up
1.2%; the German parliament approves Greek bailout; emerging markets
experiences $1 trillion in capital outflows over the last 13 months.
The
minutes from the last Fed meeting will be released today which could serve as
an appetizer to the September Fed meeting, especially if there is any clarity
provided versus the current dribble of thin gruel coming out of FOMC
participants.
Fed
whisperer Hilsenrath suggests a September rate hike (medium):
St
Louis Fed confirms what we knew all along: QE doesn’t lead to inflation or economic
growth but impact Markets (medium and today’s must read):
Bottom line: optimists
notwithstanding, the US economic news is just barely OK; in particular, if you
factor in the flow of poor anecdotal numbers.
Yes, the economy appears to still be growing but nothing to get jiggy
about. Ordinarily, that would satisfy
most investors that a recession is off the table; but the dataflow from abroad
keeps getting worse whether it is from China, Japan, the EU or the emerging
markets. So it is difficult for me to
accept that the US can continue to grow in the face of a global slowdown. It could happen; and indeed, that is our
forecast. But the odds of this scenario
prevailing are shrinking.
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. They may not be available
later on.
Second
quarter revenue and profit review (short):
Economics
This Week’s Data
Month
to date retail chain store sales grew at a slower pace than the prior week.
Weekly
mortgage applications rose 3.6% while purchase applications fell 1.0%.
July
CPI was reported at up 0.1% versus expectations of up 0.2%; ex food and energy,
it was up 0.1% versus estimates of up 0.2%.
If you are Janet Yellen, is this good news or bad news?
Other
The
problem with the BRICS (medium):
The
Atlanta Fed doubles its third quarter GDP growth estimate (short):
Politics
Domestic
The continuing
decline in teaching and grading standards in our schools (medium):
Some thoughts on
inequality (medium):
The social
security scam (short):
International War Against Radical
Islam
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