The Morning Call
2/19/16
The
Market
Technical
The indices
(DJIA 16413, S&P 1917) ended their winning streak on a low volume, lower volatility,
and mixed breadth day.
Oversold rally
(short):
The Dow closed [a] below its 100 day moving
average, now resistance, [b] below its 200 day moving average, now resistance,
[c] below the lower boundary of a short term downtrend {16748-17499}, [c] above the lower boundary of its intermediate
term trading range {15842-18295}, [d] in a long term uptrend {5471-19343}, [e]
and still within a series of lower highs but voided a very short term downtrend.
The S&P
finished [a] below its 100 day moving average, now resistance, [b] below its
200 day moving average, now resistance [c] below the lower boundary of its
short term downtrend {1888-1975}, [d] within its intermediate term trading
range {1867-2134}, [e] in a long term uptrend {800-2161} and [f] still within a
series of lower highs but voided a very short term downtrend.
The long
Treasury was up 1%. It ended [a] within
its short and intermediate term trading ranges, [b] well above its upward
trending 100 day moving average and [c] back above the lower boundary of a very
short term uptrend, negating Wednesday’s break.
GLD jumped 2.5%,
remaining within very short term and short term uptrends as well as above an upward
trending 100 day moving average.
Bottom
line: yesterday’s pause in the recent
advance left the indices with yet another lower high. Of course, the decline was shallow and on low
volume. Plus it doesn’t undo Wednesday’s
reset of the intermediate term to a trading range. On the other hand, they had every reason to
rise in light of Bullard’s dovish comments.
Interestingly, the two recent risk off trades (TLT and GLD) were quite strong
despite a very ho hum decline in stocks.
I am not sure what this all means but whether there is any significance
to yesterday’s pin action will be decided by subsequent follow through or lack
thereof.
The
latest from Doug Kass (medium):
Update
on best stock market indicator (medium):
Fundamental
Headlines
US economic data
was mixed yesterday: weekly jobless claims were lower than anticipated, the February
Philly Fed manufacturing index was below expectations and the January leading
economic indicators were in line. However,
with only one indicator left to be reported today, the tone of this week’s
stats will be mildly negative.
The Fed remained
center stage after Wednesday night comments by St. Louis Fed chief Bullard that
further interest rate hikes would be ‘unwise’ and that more QE might be appropriate.
I will leave it to
Stephen Roach to critique current central bank policies (medium and an absolute
must read):
Overseas,
Japanese January exports declined for the fourth month in a row and Chinese
January PPI fell year over year, while CPI was up but below expectations. In addition, the Organization for Economic Cooperation
and Development lowered its 2016 global GDP outlook, mentioning Brazil, Germany
and the US as slowing.
***overnight, UK
January retail sales were stronger than anticipated.
Finally, Iran
gave verbal support to the production freeze being pushed by Russia and Saudi
Arabia. While encouraging, remember all
these guys have cheated on prior agreements and flat supply in the face of falling
demand is not a prescription for higher prices. (must read):
Bottom line: the
sum of economic indicators for the last six months both here and abroad is
discouraging; and this is despite more QE from multiple central banks. Every day I link to articles written by guys who
are smarter and have deeper background on monetary policy than me; and they are
all concerned about the risks associated with unwinding QE. I have extreme
difficulty believing that the Averages, currently only 10% off their all-time
highs, properly reflect the odds of a recession or those risks about which the
aforementioned experts are concerned.
I am not
suggesting that investors run for the hills.
But it does make sense to use the current rebound to take some profits
in winners that have held up during recent decline.
Investing for Survival
The
benefits of dollar cost averaging.
News on Stocks in Our Portfolios
Coca-Cola (NYSE:KO) declares $0.35/share
quarterly dividend, 6.1% increase from prior dividend of $0.33
Revenue of $3.41B
(-4.7% Y/Y) misses by $230M
Economics
This Week’s Data
The
January leading economic indicators were reported down 0.2%, in line; but
December’s reading was revised from -0.2% to -0.3%.
January
CPI came in flat versus expectations of -0.1%; ex food and energy, it was up 0.3%
versus estimates of up 0.1%.
Other
Politics
Domestic
International War Against Radical
Islam
No comments:
Post a Comment