The Morning Call
3/29/16
The
Market
Technical
The indices
(DJIA 17535, S&P 2037) lifted slightly yesterday, but, again on very low
volume and mixed breadth. The VIX jumped
3.4%, voiding a very short term downtrend; however, it remains well below its
100 day moving average and within a short term trading range.
The Dow closed
[a] above its 100 day moving average, now support, [b] above its 200 day moving
average, now support, [c] in a short term a trading range {15431-17758}, [c] in
an intermediate term trading range {15842-18295} and [d] in a long term uptrend
{5471-19343}.
The S&P
finished [a] above its 100 day moving average, now support, [b] above its 200
day moving average, now support, [c] within a short term trading range {1867-2104},
[d] in an intermediate term trading range {1867-2134} and [e] in a long term
uptrend {800-2161}.
The long
Treasury moved up again, remaining above a Fibonacci support level. It continues to support the notion that its
recent decline is over and is now consolidating.
GLD was up. While it remains within a short term uptrend
and above its 100 day moving average, it is still above visible support. So some further weakness is possible.
Bottom line: ‘the
indices continue their solid performance given how over extended they were and
the amount of negative news they have had to overcome this (last) week.
True low volume and mixed breadth are not helpful. Plus both voided very short term
uptrends. That said, they have plenty of
near end support. So my assumption remains
that they challenge their all-time highs until/unless they negate the
aforementioned support levels.’
Fundamental
Headlines
Yesterday’s
economic news was generally mixed though somewhat upbeat: the March Dallas Fed
manufacturing index was down but better than anticipated, February personal
income was better than expected but spending and the PCE deflator were in line,
the January trade deficit was lower than forecast; however, both exports and
imports were down and February pending home sales were better than
projected. Overall, this was an
improvement from last week. However, it
was Monday of a week that includes lots of data and a speech by Yellen.
Personal
spending and income review (short):
My
favorite optimist’s take on the last weekend’s corporate profits release. As you read, remember the phrase ‘it’s
different this time’ (medium):
A
bit more pessimistic view from John Hussman (medium):
Overseas,
the Chinese government released a strong February corporate profit report; on
the other hand, an independent organization which compiles the Chinese equivalent
of the Fed Beige Book stated that capex spending was at the lowest level in its
five years of recording data and employment was at a four year low.
***overnight,
February Japanese retail sales fell 2.3%.
In
addition, Libya, Iraq and Iran have indicated that they won’t attend the April
OPEC meeting; and, of course, the US won’t be there. What possible meaning could any proposed
freeze have?
Bottom line: after
a dovish statement following the FOMC meeting week before last, then three Fed
chiefs sounding the hawkish trumpet last week, the $64,000 question is what
will Yellen do this week? Will she keep the
Fed’s Bugs Bunny routine going and hop back to a dovish tone or will she really
tighten investors’ sphincters and go along with the possibility of an April
tightening? My opinion is that it doesn’t matter because whatever
she says, it will only further enhance the notion that the Fed is clueless.
In the meantime,
the economic data both here and abroad is telling us that there is little to no
growth out there and that corporate profitability is declining. And all the while, the Averages are within a
short hair of all time high valuations.
There is
something wrong with this picture. In my
opinion, the current rally represents an excellent opportunity to raise cash
reserves by selling either a portion of your profitable investments and/or sell
your losers.
Oil
rally led by short covering (medium):
Investing for Survival
The
single entity risk problem.
News on Stocks in Our Portfolios
Economics
This Week’s Data
February
pending home sales rose 3.4% versus expectations of up 1.5%.
The
March Dallas Fed manufacturing index came in at -13.6 better than the anticipated
reading of -31.8.
Other
The
Atlanta Fed lowered its first quarter GDP growth estimate to +0.6% from +1.4%.
Year
to date bankruptcy filings hit post 2009 high (short):
Politics
Domestic
More on student
loans (short):
International War Against Radical
Islam
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for Survival’s website (http://investingforsurvival.com/home)
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