The Morning Call
3/9/16
The
Market
Technical
Surprise,
surprise, the indices (DJIA 16964, S&P 1979) actually declined yesterday,
as volume remained low and breadth mixed.
The VIX was 7%, ending above the upper boundary of a very short term downtrend
(if it remains there through the close today, the trend will be voided) and
very close to its 100 day moving average.
The Dow finished
[a] back below its 100 day moving average, negating Monday’s break and hence
remaining resistance, [b] below its 200 day moving average, now resistance, [c]
above the lower boundary of a short term downtrend {16678-17426}, [c] in an
intermediate term trading range {15842-18295}, [d] in a long term uptrend
{5471-19343}, [e] and has now made a third higher high.
The S&P ended
[a] back below its 100 day moving average, negating Monday’s break and hence,
remaining resistance, [b] below its 200 day moving average, now resistance [c]
within a short term trading range {1867-2104}, [d] in an intermediate term
trading range {1867-2134}, [e] in a long term uptrend {800-2161} and [f] has
now made a second higher high.
The long
Treasury rallied 1%+, closing well within its short term uptrend, above its 100
day moving average and above a key Fibonacci retracement level.
And,
this from Japan (short):
GLD fell
fractionally, remaining in very short term and short term uptrends, as well as
substantially above its 100 moving average.
The meager decline was a bit surprising given how overextended GLD is.
Bottom line: finally,
stocks retreated after getting as overbought as I have seen them in a couple of
years. In other words, yesterday’s pin
action was hardly a surprise or an indication that the current uptrend has
petered out. It is noteworthy that the
Averages couldn’t sustain Monday’s challenge of their 100 day moving averages---remember
how forcefully these MA’s have served as both resistance and support over the
last couple of years. However, given the
strong momentum of the recent rally, it seems likely that those resistance
levels will be challenged again. Whether
or not they prove to be the impenetrable, I still believe that the indices will
not set new all-time highs anytime soon.
The
latest from Doug Kass (medium):
Fundamental
Headlines
This
week is going to be very slow in terms of new US economic data not only in the
quantity of stats but the absence of any primary indicators. Yesterday was a good example: the February
small business optimism index came in below expectations and month to date
retain chain store sales were up slightly versus the prior week.
Overseas,
the numbers were mixed---yes, there was actually a positive number, namely
January German industrial production, which rose. The bad news, however, was really bad news as
February Chinese exports declined 25.4% year over year while imports fell 13.8%. That was a lot worse than one would have
assumed given the comments out of last weekend’s Chinese National Congress. But then we know that Chinese forecasts and data
can’t be trusted.
That
leaves Thursday’s ECB meeting as the ‘event’ of the week. Consensus is that Draghi will make big move
toward more QE/negative interest rates. ‘Consensus’
being the operative word because I don’t believe that there is a lot of room in
current stock prices for disappointment.
Draghi’s
options (medium):
Which are only slightly
better than those for the Bank of Japan (medium):
***January UK industrial
production was up 0.3%; world’s largest oil producers will meet in Moscow on
March 20; Iran threatens to walk away from nuclear deal.
Bottom
line: investors seem all atwitter about
the prospects for more QE from the ECB and the Bank of Japan and a dovish Fed
meeting next week. And they may get all
they hope for; but as the saying goes, be careful what you wish for. QE/negative interest rates have done little positive
for the global economy and, arguably, have been the primary reason for the mess
that it is now in. So what does more of
a disastrous policy buy you? Absolutely
nothing. How much of that is already in
stock prices? Don’t know. What happens if Draghi, Yellen, Abe fail to
deliver? Don’t know.
But in my opinion, the current rally
represents another excellent opportunity to sell a portion of your profitable
investments and sell your losers.
The
latest from John Hussman (medium):
Investing for Survival
A
dozen things I have learned from Richard Thaler.
News on Stocks in Our Portfolios
Economics
This Week’s Data
Month
to date retail chain store sales rose slightly from the prior week’s reading.
Weekly
mortgage applications rose 0.2% while purchase applications were up 4.0%.
Other
EIA’s
dire oil forecast (medium):
Why
banks are propping up energy companies (medium):
Politics
Domestic
National Review
of Trump’s trade policy (medium):
From my favorite
liberal blog: the crapification of healthcare (medium/long):
Quote of the day
(short):
International War Against Radical
Islam
3/9/16
The
Market
Technical
Surprise,
surprise, the indices (DJIA 16964, S&P 1979) actually declined yesterday,
as volume remained low and breadth mixed.
The VIX was 7%, ending above the upper boundary of a very short term downtrend
(if it remains there through the close today, the trend will be voided) and
very close to its 100 day moving average.
The Dow finished
[a] back below its 100 day moving average, negating Monday’s break and hence
remaining resistance, [b] below its 200 day moving average, now resistance, [c]
above the lower boundary of a short term downtrend {16678-17426}, [c] in an
intermediate term trading range {15842-18295}, [d] in a long term uptrend
{5471-19343}, [e] and has now made a third higher high.
The S&P ended
[a] back below its 100 day moving average, negating Monday’s break and hence,
remaining resistance, [b] below its 200 day moving average, now resistance [c]
within a short term trading range {1867-2104}, [d] in an intermediate term
trading range {1867-2134}, [e] in a long term uptrend {800-2161} and [f] has
now made a second higher high.
The long
Treasury rallied 1%+, closing well within its short term uptrend, above its 100
day moving average and above a key Fibonacci retracement level.
And,
this from Japan (short):
GLD fell
fractionally, remaining in very short term and short term uptrends, as well as
substantially above its 100 moving average.
The meager decline was a bit surprising given how overextended GLD is.
Bottom line: finally,
stocks retreated after getting as overbought as I have seen them in a couple of
years. In other words, yesterday’s pin
action was hardly a surprise or an indication that the current uptrend has
petered out. It is noteworthy that the
Averages couldn’t sustain Monday’s challenge of their 100 day moving averages---remember
how forcefully these MA’s have served as both resistance and support over the
last couple of years. However, given the
strong momentum of the recent rally, it seems likely that those resistance
levels will be challenged again. Whether
or not they prove to be the impenetrable, I still believe that the indices will
not set new all-time highs anytime soon.
The
latest from Doug Kass (medium):
Fundamental
Headlines
This
week is going to be very slow in terms of new US economic data not only in the
quantity of stats but the absence of any primary indicators. Yesterday was a good example: the February
small business optimism index came in below expectations and month to date
retain chain store sales were up slightly versus the prior week.
Overseas,
the numbers were mixed---yes, there was actually a positive number, namely
January German industrial production, which rose. The bad news, however, was really bad news as
February Chinese exports declined 25.4% year over year while imports fell 13.8%. That was a lot worse than one would have
assumed given the comments out of last weekend’s Chinese National Congress. But then we know that Chinese forecasts and data
can’t be trusted.
That
leaves Thursday’s ECB meeting as the ‘event’ of the week. Consensus is that Draghi will make big move
toward more QE/negative interest rates. ‘Consensus’
being the operative word because I don’t believe that there is a lot of room in
current stock prices for disappointment.
Draghi’s
options (medium):
Which are only slightly
better than those for the Bank of Japan (medium):
***January UK industrial
production was up 0.3%; world’s largest oil producers will meet in Moscow on
March 20; Iran threatens to walk away from nuclear deal.
Bottom
line: investors seem all atwitter about
the prospects for more QE from the ECB and the Bank of Japan and a dovish Fed
meeting next week. And they may get all
they hope for; but as the saying goes, be careful what you wish for. QE/negative interest rates have done little positive
for the global economy and, arguably, have been the primary reason for the mess
that it is now in. So what does more of
a disastrous policy buy you? Absolutely
nothing. How much of that is already in
stock prices? Don’t know. What happens if Draghi, Yellen, Abe fail to
deliver? Don’t know.
But in my opinion, the current rally
represents another excellent opportunity to sell a portion of your profitable
investments and sell your losers.
The
latest from John Hussman (medium):
Investing for Survival
A
dozen things I have learned from Richard Thaler.
News on Stocks in Our Portfolios
Economics
This Week’s Data
Month
to date retail chain store sales rose slightly from the prior week’s reading.
Weekly
mortgage applications rose 0.2% while purchase applications were up 4.0%.
Other
EIA’s
dire oil forecast (medium):
Why
banks are propping up energy companies (medium):
Politics
Domestic
National Review
of Trump’s trade policy (medium):
From my favorite
liberal blog: the crapification of healthcare (medium/long):
Quote of the day
(short):
International War Against Radical
Islam
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