The Morning Call
7/7/16
The
Market
Technical
The indices
(DJIA 17918, S&P 2099) bounced yesterday. Volume fell; breadth improved. The VIX (14.9) fell 4 ½%. It remains 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 up fractionally on heavy volume.
It is now above its 100 day moving average and well within very short
term, short term, intermediate term and long term uptrends.
GLD was strong
on volume, 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: after last week’s sharp rally, both
of the Averages are back within trading ranges.
The very short term question, will they continue to advance or make a
third lower high?
Fundamental
Headlines
Yesterday’s
US economic data was very upbeat: weekly mortgage and purchase applications, month
to date retail chain store sales, the June Markit services PMI and the June ISM
nonmanufacturing index were all above expectations. So week is off to a good start.
Overseas,
there was only one number: May German factory orders were flat.
***overnight,
May UK industrial output fell 0.5%, but that was better than expected; May
German industrial output declined 1.3%.
The problems
Italy could cause (medium):
The
problems of the emerging markets (medium):
Another
highlight of the day was the quintessential ‘on the one hand, on the other hand’
narrative of the minutes of the last Fed meeting---the bottom line of which was
that things are awesome but not awesome enough to raise interest rates. Talk about drivel. This takes the cake. If this massive waste of paper and time gives
you any inkling of the direction of Fed policy, then you are a better man/woman
than I. Of course, as long as it didn’t
indicate the remotest chance of a rate hike, then the pot smoking, QEInfinity devotees
are happy. The link below is to the
statement and a summary analysis of the minutes if you can endure it. But you will be equally enlightened and have
a lot more fun spanking your monkey.
Another
gem from David Stockman on the Fed (medium):
Can
rates go lower (short):
Mohamed
El Erian on low interest rates (medium):
Bottom
line: the economic numbers continue their very short term improvement. That is
the only positive in an otherwise bleak outlook: the Fed is still unable to
locate its own posterior with both hands, global economic data continues to
weaken and the EU banks continue to move toward crisis. I guess one out of four ain’t bad. But it hardly justifies current valuations.
The
latest from Jeff Gundlach (short):
Given
the current price levels, it is an excellent opportunity to sell a portion of your
winners and all of your losers.
My thought for the
day: Up until the day the Market turns
south, everyone wants to chase performance, ignore risk, discount lousy balance
sheets and poor return on equity, forget about diversification, remain fully
invested, focus on return on capital instead of return of capital and brag
about their winners. They can’t stand
the thought of being up 5% in a 10% Market rally. They are convinced that this time it’s
different. And then it’s not. One guy gets out the door and the rest are
slashing their wrists.
The
stock price of Paychex (PAYX-$60) has traded into its Sell Half Range. Hence, at the Market open the Dividend Growth
Portfolio will Sell Half of this holding.
Investing for Survival
Positioning
versus construction.
News on Stocks in Our Portfolios
Revenue of $15.39B (-3.3% Y/Y) beats
by $20M.
Economics
This Week’s Data
Month
to date retail chain store sales growth was slightly higher than the prior
week.
The
June PMI services index came in at 51.4 versus expectations of 51.3.
The
June ISM services index was reported at 56.5 versus forecasts of 53.3.
The
June ADP private payroll report showed an increase of 4,000 jobs versus
consensus of a decline of 23,000.
Weekly
jobless claims fell 16,000 versus estimates of a 1,000 rise.
Politics
Domestic
An interesting
thought from Greg Mankiw (short):
Rebelling
against the ‘experts’ (medium):
Hillary and ‘intent’
(short):
International
John
Mauldin on all things Europe (long as usual but a good read):
Visit Investing
for Survival’s website (http://investingforsurvival.com/home)
to learn more about our Investment Strategy, Prices Disciplines and Subscriber
Service.
No comments:
Post a Comment