The Morning Call
9/22/15
The
Market
Technical
The indices
(DJIA 16510, S&P 1966) bounced yesterday, but had little impact on the
overall technical picture. The Dow ended
[a] below its 100 and 200 day moving averages, both of which represent
resistance, [b] in a short term downtrend {16974-17893}, [c] in an intermediate
term trading range {15842-18295}and [d] in a long term uptrend {5369-19175}.
The S&P finished
[a] below its 100 and 200 day moving averages, both of which represent
resistance, [b] below the upper boundary of a very short term downtrend, [c] in
a short term downtrend {2010-2074}, [d] within an intermediate term uptrend
{1916-2690} and [e] a long term uptrend {797-2145}.
In addition, the
S&P tested but failed to overcome the 1970 level on the upside (1970
remains resistance) and on the downside, closed below the lower boundary of its
very short term uptrend for a second day, negating that trend.
Volume fell; but
breadth improved. The VIX (20.4) dropped 10%, ending [a] above its 100 day
moving average, now support, [b] below the lower boundary of its a short term
uptrend; if it remains there through the close on Wednesday, the short term
trend will re-set to a trading range, [c] within an intermediate term trading
range {it remains well above the upper boundary of its former intermediate term
downtrend} and [d] a long term trading range.
It is now bordering on the zone (below 20) indicative of more stable
stock prices.
The long
Treasury fell 1.5%, closing near (but above) its 100 day moving average---leaving
it as support; and it finished within short and intermediate term trading
ranges.
GLD declined,
closing in downtrends across all timeframes and below its 100 day moving
average. It can still build a bottom
were it to fail to successfully challenge its July/August lows (104). But that is yet to be seen.
Oil was up 2.5%,
but stayed below its 100 day moving average and within a short term trading
range and intermediate and long term downtrends.
The dollar was
up, but closed below its 100 day moving average, which is now resistance, and
within short and intermediate term trading ranges.
Bottom line: the
technical tea leaves are a bit mixed right now: (1) S&P 1970 remains a
battle ground. The S&P has see sawed
around this resistance/support level since late August. It is now four points below 1970, giving a
slightly negative feel to stock prices; but clearly we are one day’s trading
from reversing that and (2) the VIX has traded down and is now close to
entering a zone normally thought of as ‘calm’, meaning a positive bias to the
Market. While I currently have a
negative predisposition toward stock prices based on fundamentals, that doesn’t
mean this situation gets resolved to the downside.
The long
Treasury is also somewhat confusing. I
would have thought that on a day with a higher dollar and stock prices, bond
prices would also have been up. Instead,
they were smacked pretty hard. But that
just maybe daily noise.
Merrill
Lynch on the technical outlook (medium):
Fundamental
Headlines
Only
one US economic datapoint reported yesterday: August existing home sales were
down considerably more than expected. No
help for those fighting NOT to lower their forecast.
***overnight
in China:
Several
weeks ago in a Closing Bell, I mentioned the possibility of our ruling class
once again shutting the government down.
Well, the drop dead date (9/30) is rapidly approaching and the odds
appear to be going up for such an occurrence. Frankly, I could care less; in
fact, I wish that they would do it more often.
The more pain inflicted on the political class the better. I say that somewhat with tongue in
cheek. On the other hand, I think it
much better that they spend their time fighting over whether to extend spending
measures already enacted than on new spending.
All that said, Mr. Market generally doesn’t look kindly on government
shutdowns; and it only adds to the uncomfortable political/economic environment
which is already plagued with a dazed and confused Fed.
Bottom
line: the economic dataflow has been
poor for the last four weeks and this one is not starting out so hot. That is a lot more important for me than
trying to decipher the worthless Fed dialectic over a 25 basis point rise in
the Fed Funds rate or our political class allowing the entire government
operations to hang on a single social issue at a time when the country is being
victimized too much spending, too high taxes, too much regulation, the
deliberate thwarting of the Constitution and a foreign policy that has
existential implications. Stocks may
rise in price but I don’t know how they can do it on a sustainable basis from
such lofty levels when economic conditions are weak and likely getting weaker.
2015
US corporate revenue and earnings growth (short):
The
latest from Doug Kass (medium):
Economics
This Week’s Data
August
existing home sales fell 4.5% versus expectations of a 1.6% decline.
Other
The
Fed’s dollar dilemma (medium):
Politics
Domestic
Ron Paul on US
foreign policy (medium):
International War Against Radical
Islam
Democrats
explain the Iran deal (2 minute video):
Update on Russian
presence in Syria (medium):
And its long term
strategy (medium):
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