The Morning Call
6/15/16
The
Market
Technical
The indices
(DJIA 17674, S&P 2075) continued weak, though they managed to close off the
lows of the day. Volume decreased.
Breadth weakened. The VIX was off
slightly, but still finished well above its 100 day moving average for the
third day reverting from resistance to support.
The Dow closed
[a] above its rising 100 day moving average, now support, [b] above its 200 day
moving average, now support, [c] within a short term trading range
{17498-18726}, [c] in an intermediate term trading range {15842-18295} and [d]
in a long term uptrend {5541-19413}.
The S&P
finished [a] above its rising 100 day moving average, now support, [b] above
its 200 day moving average, now support, [c] within a short term trading range
{2037-2110}, [d] in an intermediate term trading range {1867-2134} and [e] in a
long term uptrend {830-2218}.
The long
Treasury fell fractionally, ending above the upper boundary of its intermediate
term trading range for the fourth day, resetting to an uptrend.
A history of
bund yields (short):
GLD (122.8) was
up. It is now well above the lower
boundary of its short term trading range and its 100 day moving average and is
nearing the upper boundary of its short term trading range (124.2). Resting right above that boundary is the
upper boundary of its intermediate term trading range. So clearly, GLD has a lot resistance to
overcome near term. If it breaks above
these boundaries, it is apt to either take a lot of work or a significant
unexpected negative event.
Bottom line: the
bulls tried to stem the bloodletting yesterday.
I will give them a ‘C’ for effort.
Whether they or the bears can prevail near term in the face of numerous
economic releases, the Fed meeting, Friday’s expirations and the Brexit is a
difficult call. Best to do
nothing---unless you want to take profits.
The latest from
JP Morgan’s quant guru (medium):
The TLT reset
its intermediate term trend to up. Can
it hold?
Fundamental
Headlines
Yesterday’s
US data were generally upbeat: the May small business optimism index was
stronger than expected; May retail sales (a primary indicator) were higher than
anticipated, though ex auto’s they were in line; month to date retail chain
store sales slightly improved from the prior week; April business inventories
grew less than estimates, but sales were much better. Score it for the good guys. Nothing from overseas.
***overnight,
UK unemployment fell to an eleven year low.
The
Fed and Brexit remained in the forefront of the news flow. It seems that there is general agreement on
the Street that the Fed will do nothing today; though concerns remain about the
narrative in the Fed statement. The
Brexit is another matter with varying opinions on both the results and the
consequences. I have no clue. However, as longer as uncertainty reigns, I
would expect continuing volatility in equity prices. That said, if the Market maintains its
downward course, the question will become when will a Brexit be reflected in
price?
The
latest from Doug Kass (medium):
The
latest from John Hussman (medium):
The
latest from Jeff Gundlach (medium):
The
low interest rate trap (medium):
My
thought for the day: Much has been written about the two dominant emotions that
plague investors: fear and greed. At the
moment, stock prices are in the ‘greed’ camp.
It manifests itself by being willing to pay any price regardless of the
underlying company’s fundamental.
Excitement over a new product, technology, etc. or an endless supply of
free money persuades the investor that he/she must own stock for fear of losing
out.
There are ways
to protect yourself from this portfolio crippling disease.
(1)
remember that your portfolio doesn’t know what it
doesn’t own. In other words, there is no
loss from not owning a stock that may increase in value. Your time is much better spent focusing on
those stocks that you do own. That is
where your portfolio’s gains and loses come from.
(2)
embrace a Price discipline. I have dwelled on this subject too often to
warrant saying any more.
(3)
if you just can’t help yourself, set aside a small
portion of your portfolio as play money and go chase those dream stocks. If you are right, then your portfolio is
ahead. If you are wrong, you haven’t
done much damage.
Investing for Survival
Eleven
signs that you own the right portfolio:
News on Stocks in Our Portfolios
Economics
This Week’s Data
Month
to date retail chain store sales rose slightly from the prior week.
April
business inventories were up 0.1% versus expectations of up 0.2%; but sales
rose a robust 0.9%.
Weekly
mortgage applications fell 2.4% while purchase applications were down 5.0%.
May
PPI came in up 0.4% versus estimates of up 0.3%; ex food and energy it was up
0.3% versus forecasts of up 0.2%,
The
June NY Fed manufacturing index was reported at 6.01 versus consensus of -3.5.
Other
CBO
study on who pays taxes and how much (medium and a good read):
BofA’s
global stress index (short):
More
on student debt (short):
Politics
Domestic
International War Against Radical
Islam
Visit Investing
for Survival’s website (http://investingforsurvival.com/home)
to learn more about our Investment Strategy, Prices Disciplines and Subscriber
Service.
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