The Morning Call
10/12/15
The
Market
Technical
The
S&P staged a hell of a rally last week, on the top of the prior Friday’s major
intraday reversal---negating the break of the lower boundary of its
intermediate term uptrend and blowing through the 1970 resistance level. It closed last week below its 100 and 200 day
moving averages, within a short term downtrend and in the aforementioned
intermediate term uptrend. Notice the advanced
stopped right on the mid-September high.
That is not to suggest that the rally is over. But given that stocks are in an extremely
elevated overbought position, some softness near term would not be
surprise. I know that I have said that
before.
Apparently,
no one told the bond guys that the Fed was going to stay zero bound
forever. As you can see, the long
Treasury was off in price (up in yield) in the midst of stocks Titan III
formation last week. It remains above
its 100 day moving average and within trading ranges on a very short term,
short term and intermediate term basis.
Gold
is trying hard to improve its chart. As
you can see, it negated its short term downtrend last week, resetting it to a
trading range. In addition, it closed
above its 100 day moving average on Friday; if it remains there through the
close on Wednesday, the MA will revert from resistance to support. I am getting close to nibbling.
The
VIX (17) reflected stocks upside last week.
It broke its short term uptrend, then broke the re-set trading range and
is now in a short term downtrend.
However, it remained above its 100 day moving average and within its
intermediate term trading range. A move
back to the 13 level would again make it attractive as portfolio insurance.
Halloween
to Christmas---a great time to own stocks (short):
Fundamental
Last
week’s economic data continued to be disappointing: above estimates: weekly
jobless claims, import prices and September retail chain store sales; below
estimates: August wholesale sales, September Markit services PMI, September ISM
nonmanufacturing index, September Gallup consumer spending survey, export
prices and September consumer credit; in line: the August US trade balance,
August wholesale inventories and weekly mortgage and purchase applications. The
only primary indicator was the ISM nonmanufacturing index. So we have now had six consecutive below
average weeks of data. I will revise our
forecast down (again) this week.
The
other big news item last week was the release of the minutes from latest FOMC
meeting; the bottom line of which was that its tone was much more dovish than
many expected---hence the moon shot as the QEInfinity crowd is in control of
the market, again.
The
minutes (medium):
Why
the Fed is so dovish (medium):
The
post FOMC meeting rally (short):
Why the Fed is
so wrong (medium):
Overseas,
the news was more plentiful and worse.
Except for the successful conclusion of the negotiations of the Trans
Pacific Partnership, the data was all negative: EU services PMI, composite PMI
and consumer confidence; the World Bank lowered China growth estimates; German
factory order, industrial production and exports; and Japanese machinery
orders.
Speaking
of China (short):
Junk
rally (short):
The
share buyback mirage (medium):
Investing for Survival
Learning
to deal with market uncertainty
News on Stocks in Our Portfolios
Economics
This Week’s Data
Other
Profit
margins are mean reverting (short):
The
non-velocity of money (short):
Is
the IMF stretched too thin (medium):
US
debt to GDP revised up (medium):
Japanese
retailers pronounce Abenomics a failure (medium):
Politics
Domestic
International War Against Radical
Islam
The
war in Syria grows (medium):
And gets a wee bit hotter (medium):
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