The Morning Call
8/12/16
The
Market
Technical
The indices
(DJIA 18613, S&P 2185) rose yesterday, making new highs. Volume was up; breadth was stronger. The VIX (11.8) fell 3.0%, ending below its
100 day moving average, within a short term downtrend and an intermediate term
trading range (10.3).
The Dow closed
[a] above rising 100 day moving average, now support, [b] above its 200 day
moving average, now support, [c] within a short term uptrend {17535-19271}, [c]
in an intermediate term uptrend {11312-24139} and [d] in a long term uptrend
{5541-19431}.
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 uptrend {2056-2295},
[d] in an intermediate uptrend {1917-2519} and [e] in a long term uptrend
{862-2246}.
The long
Treasury fell, but ended above its 100 day moving average and well within very
short term, short term, intermediate term and long term uptrends. However, it continues to trade within a
developing pennant formation (breaking that pattern should provide directional
guidance on bond prices).
GLD declined,
finishing above its 100 day moving average and within short term and
intermediate term uptrends.
Bottom line: so
much for a quiet Market. Investors
appeared buoyed by a surge in oil prices which have had an on again, off again correlation
with stocks for the last couple of years.
Now it seems to be on again, driven apparently by the Saudi’s agreeing
to yet another meeting at which production quotes will be on the agenda. If stocks were up because of that, investors
need to carefully re-read history. The
Saudi’s have said time and time again their strategy is to take market share
and time and time again have conducted policy as such. I am not sure how many OPEC meetings there
have been in last year at which investors and other OPEC members have anticipated
production cuts; but there have been enough for investors to know better. Nothing changed after any of them. I think that it is reasonable to expect the
same result this time.
Still, it was a
good excuse to get the juices flowing after a dull couple of weeks. The question, as it has been for every big
move of since mid-July, is will there be any follow through? So far the answer has been, no. Of course, the indices did make a new high,
so that does suggest that the Market has an upward bias. However, I remain bothered by the continuing
volatility in the VIX and the bond, gold, oil and currency markets which
suggest that something is amiss.
Companies
may be buying back their own stock, but the managers (insiders) aren’t (short):
Fundamental
Headlines
Yesterday’s
US economic data was negative: July import/export prices (with revisions) were a
wash, weekly jobless claims fell less than expected and the July US Treasury
budget deficit was horrible.
More
signs of recession (medium):
It
was not much better overseas. July UK
existing home sales declined and tensions in Ukraine heightened. In addition, the South Korean central bank
left key rates unchanged.
***overnight,
July Chinese retail sales, industrial production and fixed investment were all
below expectations: a UBS report stated that China is making progress dealing
with its huge nonperforming loan problem; first quarter German GDP was stronger
than estimates, while Italian GDP was weaker; second quarter EU flash GDP rose
0.3%, in line.
Bottom line: since
nothing good can be gleaned from above, I assume that investors just decided to
put on the buying cap and go for it.
After all, it has been quiet for too long; so if no good reason appears
to buy, just make one up and fill out your tickets.
Investors should use this situation to take
some money off the table, either selling a portion of the positions in their
winners or all of their losers or both.
My
thought for the day: at a time when your bank/broker is paying you nothing for
your cash and you can barely get a positive return on short term money,
reducing you credit card balances on which you are being charged 10-18% is a
great fixed income investment.
Investing for Survival
Experts
and the future.
News on Stocks in Our Portfolios
C.H. Robinson Worldwide (NASDAQ:CHRW) declares $0.43/share quarterly dividend, in line
with previous.
Economics
This Week’s Data
July
PPI fell 0.4% versus expectations of a 0.1% rise; ex food and energy, it
dropped 0.3% versus estimates on +0.2%.
July
retail sales were flat were forecasts of +0.4%; ex autos, it was -0.3% versus
consensus of +0.2%
Other
Apparently,
the primary explanation (I should have known this but failed to pick up on it) for
the recent big revisions in the economic data was the periodic rationalization by
the Bureau of Labor Statistics of contemporary reported data with a more
seasoned version gleaned from (1) a more complete set of numbers [many stats
are reported without having all the component data], (2) as well as the ability
to look back at all completed data series and adjust out the obvious
inconsistencies. That helps explain how those temporary ‘seasonal’
first quarter datapoint adjustments got washed out.
http://www.zerohedge.com/news/2016-08-11/and-after-how-bls-crushed-rising-wage-recovery-one-revision
More central bank
confusion (medium):
Politics
Domestic
Obamacare on the
verge of collapse (medium):
International War Against Radical
Islam
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