Monday Morning Chartology

The Morning Call

12/5/16

The Market

         

    Technical

         Monday Morning Chartology

            As you can see, the S&P retreated back below its former high after having remained above it for seven days and advancing 1%.  The big question this pin action raises in my mind is, was this a false flag breakout?  I don’t have the answer, only the Market knows that.  But we will know it soon enough.

            TLT’s chart just keeps getting uglier.  The important thing to note is that it is very near the lower boundary of its short term trading range; and the lower boundary of its intermediate term trading range is just under that.  A successful challenge of those boundaries would mean even lower prices ahead.   The higher rates go, the bigger threat they pose to equity valuations.

            Another ugly chart.  Not much to be hopeful about for the GLD bulls.  Closing back above the 38.2% Fibonacci level is a minor victory; but it sure looks like the lower boundary of its intermediate term trading range (circa 100) is in its future.

            The dollar has challenged the upper boundary of its short term trading range and failed.  That is a hopeful sign that this move (and its corresponding negative effect on trade) could be over---‘could’ being the operative word.

            After getting cut in half in November, resetting its 100 and 200 day moving averages from support to resistance and negating a very short term uptrend, the VIX recovered last week, rising above its 200 day moving average.  This may simply be a normal reaction to an oversold condition.  In which case, there is likely more downside.  On the other hand, it may be signaling that the recent decline is over.  Follow through.

    Fundamental

       Headlines

            ***overnight, Italian referendum fails, PM resigns, nobody cares; in an oddly timed but related item, German finance minister says Greece must implement reforms or leave the eurozone.

            http://www.zerohedge.com/news/2016-12-04/great-timing-award-wolfgang-sch%C3%A4uble-says-greece-must-reform-or-leave-eurozone

            Goldman on what happens next (medium):

            http://www.zerohedge.com/news/2016-12-05/what-happens-next-italy-here-goldmans-take

            More:

            http://www.zerohedge.com/news/2016-12-04/all-eyes-monte-paschi-whose-bailout-now-doubt-and-italian-bank-sector-contagion

           

            More on valuation (medium):

            http://www.advisorperspectives.com/dshort/updates/2016/12/02/market-cap-to-gdp-an-updated-look-at-the-buffett-valuation-indicator

       Investing for Survival

   

            The growing problem of public employment pension plans.

            http://awealthofcommonsense.com/2016/11/something-im-worried-about/

    News on Stocks in Our Portfolios

 

Economics

   This Week’s Data

   Other

            How China is losing the economic battle with the US (medium):

            http://www.realclearworld.com/articles/2016/11/29/the_surest_measure_of_how_chinas_economy_is_losing_112131.html

Politics

  Domestic

  International War Against Radical Islam

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