The Morning Call
10/8/15
This weekend is the OU/Texas
game. Guests arriving Friday. Partying, etc., etc. Plus an early game (11AM). No Morning Call tomorrow or Closing Bell
The
Market
Technical
Yesterday, the
indices (DJIA 16911, S&P 1995) were off to races again. The Dow ended [a] below its 100 and 200 day
moving averages, both of which represent resistance, [b] in a short term
downtrend {17107-17823}, [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 {1996-2057}, [d] in an intermediate term uptrend {1927-2720}
[e] a long term uptrend {797-2145}. It finished
above 1970 for the third day; it now reverts to support.
Volume declined
(the third day in a row); breadth improved. The VIX (18.4) was off 5% remaining
[a] above its 100 day moving average, now support, [b] in intermediate term and
long term trading ranges, [c] but below the lower boundary of its short term
trading range; if it trades there through the close on Friday, it will re-set
to a downtrend.
Update on sentiment
(short):
The long
Treasury was down, remaining out of the well-defined strong two week
rebound. It finished above its 100 day
moving average, still support; and within short term and intermediate term
trading ranges.
GLD declined,
finishing [a] above right on its 100 day moving average {resistance} but back
below the upper boundary of its short term downtrend, negating Tuesday’s upside
break [b] within short, intermediate and long term downtrends but [c] is still
developing a very short term uptrend.
Bottom line: stocks
took another step higher yesterday. The S&P
closed above 1970 resistance level for the third day, re-setting it to support. The next areas of resistance are the 100 day
moving average (2047) and the upper boundary of its short term downtrend (2056). Several things to note (1) stocks are at even
more extreme levels of overbought than before, so we are clearly closer to a
selloff. I am not suggesting a resumption
of the downtrend; I am saying that this is not a time to be chasing stocks for
a trade, (2) the Chinese markets opened last night and the pin action was not
great and (3) volume continues quite low and that tends not to be a good sign
for a continuing recovery in prices.
The
real correction is still coming (medium):
Risk
ratio charts improving (short):
Fundamental
Headlines
Yesterday
was another slow news day. In the US, weekly
mortgage and purchase applications soared but it was primarily the result of anticipating
a change in regulations. So the numbers were basically meaningless. The other datapoint was the less than
anticipated rise in consumer credit.
This
explains the jump in mortgage applications; and it is not good news (short):
Overseas,
August German industrial production fell 1.2%; and Japan held off further moves
to stimulate their economy.
***overnight,
August German exports fell 5.2% and August Japanese core machinery orders
declined 5.7%.
Bottom line: in
short, another quiet day in which most of the news was bad news---which kept
investors positively euphoric. I have no
clue what they are thinking about.
However, I do know that the economic data is subpar and getting more
so. I also know that QE in its many
forms has been a dismal failure (except QE1) wherever it has been tried by
whomever has tried it. Sooner or later,
piper will almost surely be paid.
Inside
the market of stocks (medium, interesting and a good read):
The
liquidity delusion (medium):
The
latest from Marc Faber (7 minute video):
Economics
This Week’s Data
August
consumer credit was up $16 billion versus forecasts of up $20 billion.
Weekly
jobless claims fell 13,000 versus expectations of down 6,000.
Other
More
on Bernanke’s self-congratulatory book (medium):
Politics
Domestic
International War Against Radical
Islam
This
might keep you up at night (short):
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