The Morning Call
9/19/16
The
Market
Technical
Last
week, the S&P unsuccessfully challenged its 100 day moving average and
threatened to challenge the lower boundary of its short term uptrend---unsuccessfully
being the operative word. Nothing in
this pin action to suggest any meaningful loss of upward momentum. It remains in uptrends across all timeframes.
The
long Treasury took it in the snoot (successfully challenging its very short term
uptrend and its 100 day moving average) following the Fed campaign to convince
investors that a rate hike was coming in September. But despite the fact that it is now not likely
to happen, TLT remains down---probably because the Fed’s efforts are now focused
on talking up a December rate hike. Of
course, if the economic data continues to weaken (see below), the odds of that occurring
aren’t any more likely than a September increase. Until TLT’s short/medium term uptrends are
being threatened, this latest move is not seriously concerning.
GLD
was also a victim of the Fed’s September rate hike promotion; though the technical
damage was more significant for it than for the TLT. It has broken its short term uptrend and will
confirm it today absent a rebound. It is
also near a challenge of its 100 day moving average. The chart for GDX is more impaired than
GLD. A breakdown in GLD today will likely
lead to action.
There
has clearly been a pickup in volatility in the last couple of weeks with the
VIX making two higher lows and breaking above its 100 day moving average, then
confirming it. Still it is not going to
develop into a negative for stocks until it successfully challenges its short
term downtrend.
Fundamental
While
I was on vacation, the economy turned in three poor weeks of numbers. In the week of August 29th, the
overall data was weighed to the negative as were the primary indicators: July
personal income (0), July personal spending (0), second quarter productivity
(0), the August ISM manufacturing index (-), July construction spending (-),
August nonfarm payrolls, (-) and July factory orders (-).
The
week of September 9th was a slow one with only five datapoints
recorded (two positive and three negative) with one negative primary indicator:
August ISM nonmanufacturing index.
Last
week was quite negative and included two primary indicators: August retail
sales (-) and August industrial production (-).
The
performance certainly supports our recession scenario and brings the score at
52 weeks to fifteen positive, thirty four negative and three neutral.
In
addition, the Fed proved once again that it has no idea what it is doing as it
set the Market up for a rate hike, then had to back off when the numbers turned
to sh*t.
In
short, I didn’t miss much in the way of a changing investment landscape. The economy is weak, the Fed is clueless and
stocks are overvalued.
Goldman
downgrades equities (short):
Update
on valuations (short):
The
bubble grows ever larger (medium):
Subscriber Alert
The
underlying fundamental condition of Chevron (CVX-$97) continues to deteriorate
while the stock has rallied almost 50% off its recent low. At the open this morning, the Dividend Growth
Portfolio will Sell its position in CVX.
The company is being Removed from the Dividend Growth Universe.
News on Stocks in Our Portfolios
Revenue of $8.6B (+1.8% Y/Y) misses
by $100M.
Economics
This Week’s Data
Other
Harvard
on the ‘Obama recovery’ (medium):
Update
on US corporate debt (medium):
Update
on big four economic indicators (medium):
Inside
the household net worth stat (medium):
China’s mounting debt
problem (short):
Politics
Domestic
Quote of the day
(short):
Nassim Taleb on
our intellectual elite (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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