The Morning Call
6/23/16
The
Market
Technical
The indices
(DJIA 17780, S&P 2085) drifted lower yesterday, as investors continued to sit
on the sidelines awaiting today’s Brexit vote. Volume was quite low---not
surprising in a wait and see Market.
Breadth weakened. The VIX spiked
14%, most likely investors hedging against a possible ‘leave’ vote.
The Dow closed
[a] above its rising 100 day moving average, now support, [b] above its rising 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 rising 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 rose, bouncing off a key Fibonacci level. It remained above its 100 day moving average
and within short, intermediate and long term uptrends.
GLD (120.9) was
up fractionally. Unfortunately, that was
no real improvement to its recent erratic behavior. The good news is that it remains above its
100 day moving average.
Bottom line: all
was quiet awaiting today’s Brexit vote.
Nonetheless, on a very short term basis, a lower high has been made
following a lower low. Clearly not an
upbeat signal. However, I continue to assume
that until the lower boundaries of the Averages short term trading ranges are
successfully challenged, momentum is to the upside.
Fundamental
Headlines
Two
US datapoints yesterday: weekly mortgage applications rose while purchase
applications fell and May existing home sales were up less than
anticipated. The bulk of this week’s
stats come today and tomorrow; so I await those numbers before making any
judgment on this week’s data. In
addition, there were no international economic releases.
***overnight,
the June Japanese Markit flash PMI came in flat with May’s report.
Yellen
resumed her testimony yesterday.
However, the substance of her remarks was such thin cruel that the
Market hardly noticed.
Bottom line: yesterday
was another dull day with little new economic data available either here or
abroad and Yellen hardly making a peep. ‘at the moment, all eyes are on the Brexit
vote….. But even if the ‘remain’ vote prevails, the fundamentals are still
lousy.
Nonetheless, the overriding circumstance at
this moment is that stocks remain dramatically overvalued even under the most
promising economic/political scenario.
Hence, I continue to believe that this is the moment to sell a portion of
your most successful investments and to get rid of your losers.’
A
discussion with a London odds maker on the Brexit (medium):
My
thought for the day: investing successfully is not easy; if it was, we would
all be rich. Economic analysis, security
analysis, portfolio asset allocation are time consuming processes and no matter
how much time you spend there is no guarantee of attaining even modest
objectives.
If that weren’t
enough, almost all investors are subject to cognitive errors that can lay waste
to the best analysis. Among them: seeing
patterns that don’t exist, giving undue weight to those facts that agree with
our own expectations and ignoring those that don’t, not paying as much attention
to the factors that led to losses versus those that lead to our winners, being too
emotional and putting too much trust/faith in the validity of good ‘story’. As humans we are all susceptible to the mental
errors. But it is important to be aware
of them; and when making an investment decision, ask ourselves if any of these biases
are in play.
Investing for Survival
What
to expect from bonds in a crisis.
News on Stocks in Our Portfolios
Accenture (NYSE:ACN): FQ3 EPS of $1.41 in-line.
Revenue of $8.43B (+8.5% Y/Y) beats
by $90M
Economics
This Week’s Data
May
existing home sales rose 1.8% versus expectations of up 2.2%.
Weekly
jobless claims fell 18,000 versus estimates of a 7,000 decline.
The
May Chicago National Activity Index was reported at -.51 versus April’s reading
of +0.5.
Other
Some
tertiary numbers from my favorite optimist (short):
On
the cusp of a recession? (medium):
Greg
Mankiw on the economy (medium):
Why
the middle class is shrinking (short):
Politics
Domestic
Meet the new
nominee to head the Library of Congress (medium):
Clinton aide
pleads the fifth 125 times (medium):
The (hopefully)
beginning of the end of civil forfeiture (medium):
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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