The Morning Call
10/7/16
Tomorrow is the UT/OU game.
Guests start arriving around noon today. So I will be partying until
Sunday at lunch. No Closing Bell this
week. Go Sooners.
The
Market
Technical
Yesterday, the
indices (DJIA 18268, S&P 2160) ended roughly flat with Wednesday (Dow down
slightly, S&P up a point). Volume
was flat; breadth mixed to slightly positive.
The VIX was down 1%, closing below its 100 day moving average and in a
short term downtrend---which remains supportive of stocks. Nonetheless, it is still in a very short term
uptrend---a negative.
The Dow ended
[a] above its 100 day moving average,
now support, [b] above its 200 day moving average, now support, [c] within a
short term uptrend {18176-19899}, [c] in an intermediate term uptrend
{11437-24282} 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 {2142-2378},
[d] in an intermediate uptrend {1955-2557} and [e] in a long term uptrend
{862-2400}.
The long
Treasury had another bad day on heavy volume; although other segments of the
debt complex rallied fractionally. It closed
below its 100 day moving average for the third day, reverting from support to
resistance. It did manage to finish within
short term, intermediate term and long term uptrends. TLT’s chart continues to deteriorate.
Muni’s about to
get a promotion (short):
GLD was down 1% on
heavy volume, finishing below a key Fibonacci level, below its 100 day moving
average for the third day (reverting from support to resistance), below the
lower boundary of its short term trading range for the third day (resetting to
a downtrend) and below its 200 day moving average (if it remains there through
the close Tuesday, it will revert to resistance). This chart keeps worse.
Bottom line: the
divergence between stocks and bonds/gold continued yesterday, leaving open the
question as to whether the stock guys are tip toeing through the tulips or I am
going to be wrong about higher rates disrupting the Market or this is just a
lot noise.
Fundamental
Headlines
Only
one US datapoint yesterday: weekly jobless claims were better than expected. This week’s numbers have been pretty balanced,
so there is not a lot of directional information.
There was only
one international stat: August German factory orders were strong. Overseas data has been upbeat this week---for
a change.
The
other news item yesterday came from….drumroll….the central bankers. In this case, the ECB denied the earlier ‘taper’
rumor (short):
Plus,
Deutschebank received support from yet another group (medium):
***overnight
(medium):
Though
the evidence continues to pile up of its shady dealings in the derivatives
market (medium):
Bottom line: the
ECB was the first to blink on normalizing monetary policy---so we are starting
to get some answers to my earlier questions: have the central bankers realized
their policies have been a failure (score: one no, two question marks); do they
have the cojones to follow through when Markets throw a tantrum (score: one no,
two question marks); how will the Markets react if they take QE, NIRP, ZIRP to
a new level? (score: three question marks).
On the other
hand, the Fed chieftains are driving for the rate hike hoop, so we will get further
answers on or near the December FOMC meeting---unless we get some extraordinary
data one way or the other (see nonfarm payroll report below). Of course, if they have realized their failures,
then the stats won’t make any difference---though that runs counter to everything
that they have done to date.
That leaves the
Bank of Japan which has been quiet of late, following the initial pillow fight
over current (QE, NIRP) policies. That can’t
last; but clearly I have no idea what the outcome will be.
My bet is that
nothing will change in central bank monetary policy until it is forced---which
makes the ECB a leading indicator of Fed and BOJ policy. It also means that the underlying assumption
has to be for higher stock prices, absent a ‘forcing’ event.
Mohamed
El Erian on the Market (medium):
Updated
look at the Buffett indicator (short):
Update
on margin debt (short):
My
thought for the day: there is no such thing as high returns without high
risk---no matter what your broker/financial advisor says. However, there is such a thing as high risk
without high returns---like when you don’t do your homework, you believe some
cock and bull story about a ‘sure thing’ or you think that it is a great idea
to buy stocks at historically high multiples.
Investing for Survival
Avoiding
financial stress during the holidays.
News on Stocks in Our Portfolios
Economics
This Week’s Data
September
nonfarm payrolls grew 156,000 versus expectations of up 168,000; the
unemployment rate rose to 5%. It will be
interesting to see how the Fed handles this number.
Other
US
business bankruptcies rise (medium):
More
on the proposed OPEC production cuts (medium):
Politics
Domestic
Not firing
anyone and giving them more money is a real poor way to fix things (short):
International War Against Radical
Islam
Update on Syria (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