The Morning Call
10/18/16
The
Market
Technical
Yesterday, the
indices (DJIA 18086, S&P 2126) drifted lower. Volume fell; breadth was negative. The VIX up fractionally, closing above its
100 day moving average (support) and in a very short term uptrend but back below
its 200 day moving average (now resistance) and in a short term downtrend. Like virtually all the charts discussed in this
section, the VIX is struggling at what appears to be an inflection point.
The Dow ended
[a] below its 100 day moving average, now resistance, [b] above its 200 day
moving average, now support, [c] in a short term trading range {17092-18693},
[c] in an intermediate term uptrend {11503-24348} and [d] in a long term
uptrend {5541-19431}.
The S&P
finished [a] below its 100 day moving average, now resistance, [b] above its
200 day moving average, now support, [c] in a short term trading range {1995-2193},
[d] in an intermediate uptrend {1962-2564} and [e] in a long term uptrend
{862-2400}.
The long
Treasury was up fractionally (though major sectors of the bond complex were
down), closing below its 100 day moving average (resistance), within a very
short term downtrend, but bounced back above a key Fibonacci level. It remained
within short term, intermediate term and long term uptrends. TLT’s chart is still healthy but seems to be
developing heartburn.
GLD also rose, but
ended below a key Fibonacci level, below its 100 and 200 day moving averages
(resistance) and in a short term downtrend.
This chart gets uglier.
Bottom line: the
Averages traded below minor support levels but not by much. Even though on the surface, that suggests
lower prices when couple with last week’s successful challenges of their 100
day moving averages and their short term uptrends, the pin action has not
developed into any meaningful downside follow through. ‘---so it is unclear just how much support
has been loss for stocks. Likewise, TLT and
GLD have stabilized, at least temporarily.
As I said….., it seems like the technical action in all these Markets is
suggesting an inflection point. If that
is so, unfortunately, I have no clue which direction prices will break.’
The
myth of ‘cash on the sidelines’ (short):
Fundamental
Headlines
The
economic dataflow got off on the wrong foot, yesterday: September industrial
production (primary indicator) and capacity utilization came in below forecast
while the October NY Fed manufacturing index was very disappointing.
Perhaps
the biggest news was what occurred over the weekend, i.e. the ECB and the Fed
both seemed to embrace the BOJ’s new ‘managing the yield curve’ strategy. The
Markets gave the news a mixed review; I give it an ‘F’. This is nothing but the admission that all
the QE, NIRP, ZIRP have failed. Yet the central
bankers just can’t admit that the more that they try to exercise control over the
economy, the less they end up controlling it and the more damage they ultimately
impose on the Markets.
Janet
does it again (medium):
Another
unintended consequences of ZIRP (medium):
Bottom line: “I think that the poor pin action of the
last couple of weeks reflects that investors are having trouble weighing the
relative importance of a number of potentially significant economic factors (1)
a prospective December Fed rate hike, (2) a softening in attitude toward
monetary normalization by the ECB and BOJ, (3) a weakening global economy, (4)
a possible poor third quarter earnings season, (5) the effects of a 2017 Brexit
and (6) the magnitude of any OPEC production cut. Plus, the somewhat chaotic US political environment
probably doesn’t help. Clarity will
ultimately occur and with it a better sense of Market direction. Until that happens, patience is
important. That said, it is not too late
to take some money off the table.’
My
thought for the day: I constantly harp on avoiding taxes and fees in order to
improve your portfolio’s performance. We are moving into the time of year to be focusing
on the former. Tactics include
harvesting tax losses, contributing to retirement plans or a 529 plan and
delaying the recognition of income.
Subscriber Alert
The
most recent review of CF Industries (CF) determined that the company’s
financial condition no longer meets the minimum criteria for inclusion in the Aggressive
Growth Universe. According, it is being
Removed from that Universe and Sold from the Aggressive Growth Portfolio at the
open this morning.
Investing for Survival
The
‘buy and hold’ nonsense.
News on Stocks in Our Portfolios
Revenue of $2.6B (+2.8% Y/Y) beats
by $10M.
Revenue of $17.82B (+4.2% Y/Y) beats
by $110M.
Revenue of $2.84B (-2.4% Y/Y) misses
by $30M.
Revenue of $19.2B (-0.4% Y/Y) beats
by $200M.
Economics
This Week’s Data
September
industrial production was up 0.1% versus expectations of up 0.2%; capacity
utilization came in at 75.4 versus estimates of 75.6. Both August numbers were revised down.
September
CPI was reported at +0.3%, in line; ex food and energy it rose 0.1% versus
projections of +0.2%.
Other
Italy’s
banking crisis is spiraling out of control (medium):
Government
accounting sleight of hand (medium and a must read):
Ford idles four factories
(medium):
Politics
Domestic
The GOP civil
war (medium):
AP sat on Iran
deal story (medium and a must read):
International
The
Yemen attack story changes (short):
EU is a house of cards (medium):
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