The Morning Call
10/22/15
I have to do my continuing
education as a broker dealer principal today.
It is a lengthy process, so I don’t know how thorough tomorrow’s Morning
Call will be. Plus I leave Friday
afternoon for my pledge class reunion, so no Closing Bell this week.
The
Market
Technical
The indices
(DJIA 17168, S&P 2018) continued to consolidate yesterday. The Dow ended [a] below its 100 and 200 day
moving averages, both of which represent resistance; it continued to fall away
from its 100 day MA {17250}, [b] in a short term downtrend {17060-17784}, [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; it also continued the retreat from its 100 day MA {2039}, [b] below
the upper boundary of a very short term downtrend, [c] in a short term
downtrend, but nearing its upper boundary {1983-2044}, [d] in an intermediate
term uptrend {1939-2731} [e] a long term uptrend {797-2145}. It also closed back below its September highs
after three days above it which would leave it as resistance.
Volume was flat;
breadth was negative. The VIX (16.7) was
up 6%, 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.
The long
Treasury was up 1%, 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.
GLD dropped, 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.
Bottom line:
stocks’ slide yesterday was sufficiently small to keep the general notion alive
that recent trading is just a time based consolidation after getting extremely
overbought (that is, trading in a narrow range over an extended time versus a
more substantial selloff).
On a more
negative note, the Averages retreated further from their 100 day moving
averages and the S&P fell back below its September high, voiding the break
and leaving it as resistance.
That all
suggests a slightly more negative short term technical picture; but the indices
are still in an area congested with an array of both resistance and support
levels. So it remains ‘to be determined’ whether this
latest rally has more legs to the upside.
As I concluded
yesterday: My technical bias is still on the side of another challenge of the
Averages all-time highs; though on the fundamental side, (1) I don’t think that
challenge will be successful and (2) Fair Value will ultimately pull prices
lower.
Fundamental
Headlines
Little
data out yesterday. In the US, weekly
mortgage and purchase applications were up, but they continue to be impacted by
the change in disclosure rules---so there is no information value. In addition, oil inventories (which I don’t
normally pay a lot of attention to) were well above expectations and that
caused a selloff in oil related securities.
Overseas, Japanese exports continued to fall which is just another in a
long line of poor global numbers.
More
bad corporate data (medium):
***overnight,
the Chinese central bank added liquidity to its banking system, the head of the
ECC said that it was giving Greece more money as it continues to implement
reforms and the ECB left key interest rates unchanged---however, all eyes
remain on Draghi’s press conference, due shortly.
Bottom line: yesterday’s
takeaways were: (1) the global economy continues to signal slowing growth but (2)
we made it through the day without a negative earnings/revenue surprise from an
industry leader except for one: American Express. Neither cause me to doubt our forecast or
beat the drum any harder for it.
Today will
witness the release of the majority of this week’s datapoints (including
jobless claims, existing home sales and leading economic indicators), plus the
results of an ECB meeting. I await the
results.
Net, net, don’t
chase stock prices at these levels.
Indeed, 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 3,000 versus expectations of a 10,000 increase.
The
September Chicago National Activity Index came in at -.37 versus estimates of
-.05.
Other
Politics
Domestic
The cost curve
for Obamacare (medium):
American obesity
(short):
Will Puerto Rico
get a bailout? (medium):
International War Against Radical
Islam
Update on the
war in Syria (medium):
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