The Morning Call
7/8/16
The
Market
Technical
The indices (DJIA 17895, S&P 2097)
had a pretty volatile day, opening big to the upside then trading down and
rebounding to end with a minor loss. Volume fell again; breadth was stable. The VIX was down fractionally, remaining
below its 100 day moving average. The
lower boundary of its short term trading range is 12.5.
The Dow closed
[a] above its rising 100 day moving average, now support, [b] above its 200 day
moving average, now support, [c] within its 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 its 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 was unchanged. It is remains above
its 100 day moving average and well within very short term, short term,
intermediate term and long term uptrends.
GLD was slightly
lower, ending above its 100 day moving average and within short and
intermediate term uptrends. Next
resistance is the upper boundary of its long term downtrend; now at circa
139.
Bottom line: despite
the indices initial rally above the last lower high, they closed below it. So very short term the downtrend
continues. That said, everyone awaits
today’s nonfarm payroll number which will likely prompt a move---I just don’t
know which way.
That said, the
Averages are within short and intermediate trading ranges. The issue is the direction of momentum.
Fundamental
Headlines
The
string of upbeat US economic stats continued yesterday with the June ADP
private payroll report and weekly jobless claims both coming in quite
positive. Less encouraging was June
retail chain store sales. But overall,
we are heading for a second week of improving US datapoints.
Overseas,
the numbers weren’t quite as promising as May UK industrial output fell and May
German industrial output declined.
***overseas,
June UK retail sales fell 5.1%; May German and Japanese trade surpluses
declined.
Much
more concerning was the news flow on the gathering EU banking crisis:
(1)
another German bank near insolvency/
(2)
sovereign credit ratings keep deteriorating (short and
a must read):
Bottom line: the
US economic numbers are on a two week sizz.
That clearly raises the hope that the economy could be stabilizing; but
right now, hope is all it is. Meanwhile,
across the pond, conditions continue to deteriorate especially in the EU banking
sector which is overleveraged on an asset base that is riddled with nonperforming
loans. Unfortunately that is not all:
(1) the UK property companies are folding like cheap umbrellas and (2) the
credit agencies are having a field day slashing ratings.
That said,
investors are tip toeing through the tulips in search of candy canes, daisies
and unicorns; so, in their minds, none of the above appears to be a problem. As if.
Given
the current price levels, it is an excellent opportunity to sell a portion of your
winners and all of your losers.
Five
bricks in the wall of worry (medium):
My
thought for the day: It is easier to make up opportunity costs than actual
losses. In other words, you can make up profit
you didn’t make because you didn’t buy a stock that went up easier than you can
make up an actual loss that you suffered.
And the reason is simple---you have more money to use to make up the
opportunity cost than to recoup an actual loss.
That is why our Stop Loss Discipline is so valuable. It forces you to ignore the emotion that is
attached to admitting that you were wrong.
Which is worse admitting that you wrong or losing money?
Investing for Survival
The
perils of benchmarking your portfolio.
News on Stocks in Our Portfolios
Economics
This Week’s Data
June
retail chain store sales were mixed.
June
nonfarm payrolls rose 287,000 versus expectations of an increase of 180,000.
Other
Globalization
has changed the rules (medium):
US
commercial bankruptcies skyrocket (medium):
Politics
Domestic
International War Against Radical
Islam
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for Survival’s website (http://investingforsurvival.com/home)
to learn more about our Investment Strategy, Prices Disciplines and Subscriber Service.
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