The Morning Call
4/19/16
The
Market
Technical
The indices
(DJIA 18004, S&P 2094) had a great Monday, albeit on dismal volume. Breadth improved; and the VIX got
whacked---but is now back at levels that suggest a bottom (top in stocks) is
near.
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 uptrend {17392-18350}, [c] in an
intermediate term trading range {15842-18295} and [d] in a long term uptrend
{5471-19343}.
Dow nearing a ‘golden
cross’ (short):
The S&P
finished [a] above its 100 day moving average, now support, [b] above its 200 day moving average, now support, [c] back
above the upper boundary of its short term trading range {1867-2081}; if it
remains there through the close on Wednesday, the short term trend will reset
to up, [d] in an intermediate term trading range {1867-2134} and [e] in a long
term uptrend {800-2161}.
The long
Treasury fell, but closed within a very short term uptrend, a short term
uptrend, above its 100 day moving average and above a Fibonacci support
level.
GLD also
declined, ending within a short term uptrend, above its 100 day moving average
and a key Fibonacci support level. However, it remains in a very short
term downtrend.
Bottom line: the
Averages appear to be regaining upside momentum despite the lack of volume and
even a modicum of good news. My major
technical takeaways remain: (1) stocks are at a level of heavy congestion and
so, yesterday’s pin action notwithstanding, it makes sense that the momentum will
become a bit more labored and (2) my assumption is that the Averages will
challenge their all-time highs.
Fundamental
Headlines
There
was one minor US datapoint released yesterday---homebuilder confidence which
was below estimates. This was the first day
of what will be a very slow week, stat-wise; and much of that data will housing
focused.
***overnight,
April German investor confidence rose and rumors flew that Japan would make further
easing moves in the wake of last weekend’s disastrous earthquakes.
The
other noteworthy news item included the failure of the Doha meeting to reach an
agreement on a freeze in oil production and a continuation of US groveling to
the Saudi’s.
Bottom line: the
universal sentiment on the Street last Friday was that a Doha failure would
spark a sell off. Apparently, no one was
listening or gave a s**t. I am not being
critical of Wall Street pundits, I am pointing out the strength of the bullish
sentiment. It doesn’t matter whether the
news is good or bad, stocks seem to want to go up.
To date,
decelerating economic growth, poor corporate revenue and earnings growth,
stretched equity valuations have counted for nothing. The only thing that appears material is how much
further QE can be pushed by the global central bankers---despite its dismal record
of success and despite the massive misallocation and pricing of assets.
Can it
continue? Sure. As the saying goes ‘the Market can stay
irrational longer than you can stay solvent’.
That said, I believe it just as irrational to be fully or near fully
invested in the current economic/valuation environment on the proposition that you
will be smart enough to protect your portfolio before the mean reversion
process begins in earnest.
Given stock
prices’ proximity to their highs, I believe that it is an excellent opportunity
to sell a portion of any stock that is at or near its all-time high.
The
great US economic growth myth (medium):
Investing for Survival
What
stock buybacks tell us about the market.
News on Stocks in Our Portfolios
Revenue of $17.48B
(+0.6% Y/Y) misses by $20M
Revenue of $6.08B
(-8.2% Y/Y) misses by $280M.
Economics
This Week’s Data
The
April National Homebuilders confidence index was reported at 58.0 versus
expectations of 59.0.
March
housing starts fell 8.7% versus estimates of a 1% decline.
Other
Lending,
housing and GDP growth (short):
A
great piece on the inequality of wealth (short):
A
somewhat different take on the American standard of living (short):
Update
on US and global debt growth (medium and a must read):
Wells Fargo rewarded with
primary dealer status one a month after admitting to defrauding the government
(medium):
Politics
Domestic
International
The
latest on the third Greek bailout (medium):
Visit Investing
for Survival’s website (http://investingforsurvival.com/home)
to learn more about our Investment Strategy, Prices Disciplines and Subscriber
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