The Morning Call
11/12/15
The
Market
Technical
The indices
(DJIA 17702, S&P 2075) drifted lower on a quiet Veterans’ Day. The Dow ended [a] below its 100 and 200 day
moving averages, both of which represent resistance, [b] in a short term trading
range {16919-18148}, [c] in an intermediate term trading range {15842-18295}and
[d] in a long term uptrend {5471-19343}.
The S&P
finished [a] below its 100 and 200 day moving averages, both of which represent
resistance, [b] in a short term trading range {2016-2104}, [d] in an
intermediate term uptrend {1952-2744} [e] a long term uptrend {800-2161}.
Volume fell
slightly; breadth deteriorated. The VIX
(16.0) was up 5%, ending [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.
Plus
(medium):
The bond market
was closed.
GLD declined fractionally,
ending [a] right on the lower boundary of its short term trading range [b]
below its 100 day moving average, now resistance, [c] in intermediate and long
term downtrends.
Bottom line: with
the bond market closed and no economic releases, stocks traded in a tight
range. My conclusion from yesterday
holds: ‘I think the Market could still go
either way short term. Longer term,
equities are caught between two forces: one of the most powerful seasonal (up) times
of the year and the discounting of a first Fed rate hike in six years. I have no clue which direction stocks will
head; however, given current extended valuations, even if the Averages
challenge their all-time highs and the upper boundaries of their long term
uptrends, I don’t believe that they will be successful.’
What
it takes to be a trader these days (short):
Fundamental
Headlines
As
I noted above, there was no US economic releases yesterday. However, there was plenty of news overseas: October
Chinese industrial production and urban fixed investment were below
expectations while retail sales were better; in addition, the Financial
Stability Board said that Chinese banks may need as much as $400 billion new equity
in order to meet new global capital requirements.
In other news,
Canada is nearing recession levels; base metal prices are now down 50% off 2011 highs; and finally, Draghi
made another super duper dovish comment and then the ECB repeated them to be
sure everyone got the message (medium):
***overnight,
Draghi tripled down on more QE in December (you sure you understand?); the
Greeks are in the streets (again) protesting the non-receipt of the latest
bailout package; Japanese machinery orders were up 7.5%.
The
news from Greece (medium):
Bottom line: Chinese
stats continue to deteriorate; and the potential risks of economic/financial
problems were made all the worse by the aforementioned statement from the
Financial Stability Board. Canada, one
of our largest trading partners, is having its own set of difficulties. And ECB apparently is not that enthralled
with the EU economy, given the every pointed remarks about more QE from Draghi
and other officials.
Even if you
believe that the recent improvement in the US data is a sign that the economy
has stabilized, one has to question how long that will last in view of the sustained
weakening abroad.
So the question
is, will the Fed continue to disregard not just the poor data in the US but also
the more difficult to ignore global stats and raise rates, deluding itself that
somehow it still has a chance to extract itself from the policy catastrophe it has
wrought. My opinion hasn’t changed:
whenever the Fed starts to normalize monetary, Market pain will be occurred;
and the longer it waits, the greater the pain.
***no less than
six Fed officials give speeches today.
The most
important point is that I would use the strength to take some profits in
winners and/or eliminating investments that have been a disappointment.
Here
are some interesting status on valuation s.
(short):
Why
companies love stock buybacks (medium and today’s must read):
For
example (medium and should be read along with the above link):
Economics
This Week’s Data
Weekly
mortgage applications fell 1.3% while purchase applications were up 0.1%.
Weekly
jobless claims were unchanged, in line.
Other
A
sign that the economic cycle is winding down (short):
Politics
Domestic
Obamacare---sucker’s
bet (short):
Advice for Trump
on China (medium):
International War Against Radical
Islam
Traders can improve their returns on investment by keeping themselves well updated with market movements. Daily reports offered by epic research on stock market are also good for learning point of view.
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