The Morning Call
11/9/15
The
Market
Technical
Monday Morning Chartology
After
a big run, the S&P slowed down late last week, testing the upper boundary
of its short term trading range, then falling back. However, the decline was not by much, leaving
the index within a short striking distance of that boundary. The slowdown in upward momentum was likely the
result of the growing awareness that a December rate hike is increasingly
probable. That said, the reaction was
miniscule when compared with past instances where Markets thought that the Fed
was going to raise rates---suggesting investors believe that the economy is strong
enough to not be impacted by higher interest rates. That brings us closer to the test of my
thesis that higher rates will have little effect on the economy but will
significantly impact the Market.
The
Santa Claus rally (short):
Bond
investors finally decided to get serious about a December rate hike, presumably
a result of the Friday jobs report and/or the Fed’s Bullock’s comment that a
bad jobs number could still argue for a rate hike. On Friday, TLT was down 1.5%, finishing (1) below
its 100 day moving average, now support; but if it trades there through the
close on Tuesday, it will revert to resistance, and (2) below the lower boundary
of the developing pennant formation; this violation points to more downside in
bond prices. Meanwhile, TLT remains
within short and intermediate term trading ranges. As important, not only did the long Treasury
take it in the snoot on Friday, bond prices across all spectrums were down
sharply.
Question:
is this chart ugly or what? To be fair,
GLD does tend to trade inversely to interest rates; so the latest move down is
not exactly unexpected. But it is not
the direction of price that is bothersome right now but the level. It is now at its lows of 2009. I just wonder how much farther it can fall.
The
dollar soared last week as the notion of higher interest rates gained momentum.
The
VIX is back inside its five year trading range, closing Friday below its 100
day moving average, within a short term downtrend and an intermediate term
trading range. I still believe that
below 13, the VIX offers good value as portfolio insurance.
Fundamental
***overnight, October Chinese exports fell 6.9% while imports dropped 18.8%; the OECD lowered its global growth estimates for 2015 and 2016; German exports were better than expected.
Investing for Survival
The
Market is smarter than you.
Economics
This Week’s Data
Other
Update
on the Baltic Dry Index (short and not good):
The
current state of the subprime mortgage market (short):
Corporate
leverage at record levels (medium):
Politics
Domestic
More problems
for Hillary (medium):
New ones for Ben
Carson (medium):
International
Will
Portugal become the next Greece? (medium):
Another step in curbing
the risks of ‘too big to fail’ banks (medium and a must read):
No comments:
Post a Comment