The Morning Call
10/29/15
I am off for a weekend with
friends in Santa Fe. No Morning Call
tomorrow and no Closing Bell
The
Market
Technical
The indices
(DJIA 17779, S&P 2090) took off again yesterday. The Dow ended [a] above its 100 moving
average, now support, [b] above its 200 day moving average, reverting from
resistance to support, [c] above the upper boundary of its short term downtrend
{17036-17751}; if it remains there through the close on Friday, it will re-set
to a trading range, [d] in an intermediate term trading range {15842-18295} and
[e] in a long term uptrend {5369-19241}.
The S&P
finished [a] above its 100 moving average, now support, [b] above its 200 day
moving average, now support, [c] in a short term trading range {2016-2104}, [d]
in an intermediate term uptrend {1943-2735} [e] a long term uptrend {797-2161},
[e] above its September highs, now representing support.
Volume was flat;
breadth was up. The VIX (14.3) fell 7%, finishing [a] below its 100 day moving average,
now resistance, [b] within a short term downtrend and [c] in intermediate term
and long term trading ranges. Below 13,
it will again represent good portfolio insurance.
The long
Treasury was down fractionally, apparently not that impressed with a more
hawkish Fed and ending above its 100 day moving average, still support, within very
short term, short term and intermediate term trading ranges and continues to
develop a pennant formation.
Italy
sells bonds at a negative interest rate (sucker) (medium):
GLD was down, closing
[a] above its 100 day moving average, now support [b] in a short term uptrend
[c] in intermediate and long term downtrends.
In my opinion, it needs to successfully challenge the upper boundary of
its intermediate term downtrend to conclusively establish that a bottom has
been made.
Oil was very
strong, ending below its 100 day moving average, bouncing off the lower boundary
of it very short term trading range but still within very short term and short
term trading ranges.
The dollar was
up 1% (it was impressed with the Fed statement), finishing above its 100 moving
average day, now support and above its 200 day moving average, now support. It remains within short and intermediate term
trading ranges. However, it broke above the
upper boundary of a very short term downtrend; if it remains there through the
close today, it will reset to a trading range.
Bottom line: the
Averages continued to push through resistance levels, gradually wiping out
barrier after barrier and raising the odds of challenging their all-time highs
and the upper boundaries of their long term uptrend. Although I continue to believe that any of those
challenges will be unsuccessful.
Fundamental
Headlines
There
were a couple of minor datapoints released yesterday: weekly mortgage and
purchase applications were down and so was the September US trade balance.
However,
as you know the focus was on the central banks.
Overseas, the Swedish central bank embarked on its fourth round of QE.
***overnight,
October German unemployment fell and September Japanese industrial production was
better than forecast.
Of
course, center stage and the treat of the day was the Fed statement following
this week’s FOMC meeting. To summarize,
it left interest rates unchanged, downplayed its concern about the global
economy, noted that job growth had slowed but that household spending and
business investment were slightly better.
All that
considered, it was a tad more hawkish than expected. However, it begs the question what global
data and household spending and business investment numbers is the Fed looking
at? As you know, the stats were terrible
for eight weeks, followed by a one week reprieve and now it appears that the
economy is back on track to under deliver again this week. Which begs the other question, how can an
economy that has been underperforming since the last FOMC meeting be doing
better?
The answer is
that we all know that what the Fed says about the economy doesn’t mean diddily. Mario Draghi could get a headache tomorrow (or
more importantly the Dow could be off 1,000 points) and suddenly the ‘tone’ of
the Fed would reset to dovish.
The
Fed’s statement (medium):
Fed
whisperer Hilsenrath’s statement (medium):
The
Fed is fighting the wrong war (medium and a must read):
Bottom line: yesterday’s Fed statement was more of the same
inane blather foisted on the public by a Fed whose sole concern is a bunch of
whiney butt Wall Street prima donnas in the hope that they will continue to
bail the Fed out of an otherwise untenable position---which is to say, keep the
Market up despite an economy that is sinking into recession as a result of the
gross misallocation of assets and prices brought on by an otherwise senseless
experiment in bureaucratic hubris.
I would not
chase stock prices at these levels.
Indeed, I would use the strength to take some profits in winners and/or
eliminating investments that have been a disappointment.
Economics
This Week’s Data
Weekly
jobless claims rose 1,000 versus expectations of up 6,000.
Third quarter
GDP came in up 1.5% versus estimates of up 1.7%.
Other
Politics
Domestic
Why the
budget/debt ceiling deal is a bad deal (medium and a must read):
And second round
of applause from David Stockman (medium):
International War Against Radical
Islam
