The Morning Call
8/13/15
The
Market
Technical
Yesterday was a
stomach churner, with the indices (DJIA 17402, S&P 2086) trading down
dramatically at the open then recovering to close almost flat. That said nothing really changed,
technically. The Dow ended [a] below its
100 and 200 day moving averages, both of which represent resistance, [b]
slightly above the lower boundary of its recently re-set short term trading
range {17385-18295}, [c] in an intermediate term trading range {15842-18295}
and [d] in a long term uptrend {5369-19241}.
The Dow ‘death
cross’ (short):
Who was doing
the buying yesterday? (short):
The S&P
finished for the second day below [a] its 100 day moving average; if it remains
below this level though the close on today, the MA will revert from support to
resistance and [b] the lower boundary of its short term uptrend; if it remains
below this level through the close today, it will re-set to a trading
range. For the moment, it remains in
uptrends across all timeframes (2102-3031, 1884-2648, 797-2145).
Volume rose;
breadth rebounded though the flow of funds remained negative. The VIX was down fractionally---ending below
its 100 day moving average and remaining within a short term trading range, an
intermediate term downtrend and a long term trading range.
Another
divergence (short):
The long
Treasury fell, but still finished above [a] its 100 day moving average, now
support [b] the lower boundary of its short term trading range and [c] the
lower boundary of a very short term uptrend.
GLD was up for
the sixth day in a row, but remained below its 100 day moving average and in short,
intermediate and long term downtrends. However, it ended above the
upper boundary of its very short term downtrend; if it remains there through
the close today, that trend will be negated.
It also offers the small chance that GLD has found a bottom.
Oil was again, ending
below its 100 day moving average and within short and intermediate term
downtrends. The dollar fell, remaining within short and intermediate term
trading ranges but below its 100 day moving average.
Bottom line: clearly
there is still life in the bulls, though they have a lot of work to do if the
Averages are going to re-sync on the upside.
That said, barring a big rally today, the S&P will be joining the Dow
breaking below its 100 day moving average and the lower boundary of its short
term uptrend. That would not be a good
sign for the larger issue ---have we seen the top? Remain patient but pay close attention because
I still believe that the big Market news near term will likely be told by the
technicals.
The long
Treasury traded down, but did nothing to challenge any technical boundaries,
leaving the no hike/economic weakness scenario intact.
Fundamental
Headlines
There
were two minor datapoints reported yesterday: mortgage and purchase
applications were weak; the July budget deficit was $149.2 billion. But that number was impacted by the calendar
timing of benefit payments; adjusted the figure was $110 billion---still not
great.
But
the day was all about the technicals.
The day began with pessimism run rampant as the Chinese the government
allowed another downward adjustment in the yuan Tuesday night. Then stocks reversed and made up a huge
deficit off the lows.
Two
big reasons China devalued the yuan (medium):
The
counterpoint to the concerns about the yuan devaluation (medium):
***overnight,
the yuan slipped again but the Bank of China stated that there is no reason for
it to drop further. The Greek parliament
is set to vote of the recently negotiated bailout agreement.
Bottom line: whether
yesterday was another short covering rally similar to Monday’s pin action or a
more upbeat assessment in investors’ perception of the Chinese devaluation, I haven’t
a clue. This Market has been so
schizophrenic of late, it is tough to make any judgment about what investors
are or are not discounting. So the
bottom line is very much in line with the Technicals.
That said, 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.
Economics
This Week’s Data
July
retail sales rose 0.6% versus expectations of up 0.5%; ex autos they were up
0.4%, in line.
Weekly
jobless claims increased 5,000 versus estimates of being unchanged.
July
export prices fell 0.2% versus forecasts of down 0.3%; import prices dropped
0.9% versus consensus of down 1.0%.
Other
More
on yesterday’s wholesale inventory/sales numbers (medium):
Politics
Domestic
Is Mexico really
killing us at the border? (medium):
International War Against Radical
Islam
No comments:
Post a Comment