The Morning Call
1/5/17
The
Market
Technical
Yesterday, the
indices (DJIA 19942, S&P 2270) moved up again, pressing closer to the (magical)
20000/2300 levels. Volume declined but
is still high. Breadth was mixed but
remains in overbought territory. The
VIX (11.8) fell another 7 ¾ %, closing below its 200 day moving average (now
resistance), below its 100 day moving average (now resistance), within a short
term downtrend and is now bearing down on the lower boundary of its
intermediate term trading range (10.3).
The Dow ended
[a] above on its 100 day moving average, now support, [b] above its 200 day
moving average, now support, [c] in a short term uptrend {18372-20422}, [c] in
an intermediate term uptrend {11662-24512} and [d] in a long term uptrend
{5720-20271}.
The S&P
finished [a] above its 100 day moving average, now support, [b] above its 200
day moving average, now support, [c] within a short term uptrend {2145-2489},
[d] in an intermediate uptrend {2015-2617} and [e] in a long term uptrend
{881-2419}.
The long
Treasury was up again but on much lower volume.
It still ended in a very short term downtrend, in a short term trading
range and below the 100 day moving average (now resistance) falling further below
its 200 day moving average (now resistance).
TLT still has a lot of work to do to overcome a clear and powerful
downtrend.
And
(medium and a must read):
GLD (110.5) continues
to mirror TLT, rising but remaining in a short term downtrend and below its 100
day moving average (now resistance) which continues to push further below its
200 day moving average (now resistance).
There still is not much stopping it from going to the lower boundary of
its intermediate term trading range (100.0).
The dollar reversed
again, finishing right on the upper boundary of its short term trading range. I am still waiting to make the call on a
reset to an uptrend.
Bottom line: my
assumption continues to be that the indices will at least challenge the
20000/2300 levels; and if victorious, there is no resistance between those
levels and the upper boundaries of their long term uptrends. But as you know, I don’t believe any such
challenge (of the upper boundaries) will be successful.
I
am a bit confused by the recent pin action in the bond markets (foreign rates
rising, US rates falling) and that’s concerning.
Seek
and destroy trading bots (short):
Fundamental
Headlines
It
was a slow day for US economic data: mortgage and purchase applications fell
while month to date retail chain store and December light vehicle sales were
up.
Overseas,
the numbers continued strong: the December eurozone final composite PMI, the
December eurozone CPI and the December Japanese Markit manufacturing PMI were
all better than expected.
***overnight,
the December UK services PMI and the December Chinese services and composite
PMI’s were all above their November readings.
The minutes from
the last FOMC meeting were also released yesterday; and to be frank, there was an
even heavier dose of the usual ‘on the one hand, on the other hand’ dialectic. What I found particularly confusing is that
after begging for a more aggressive fiscal policy to relieve it of the burden
stimulating the economy, it is now suggesting that a Trump fiscal is a potential negative (too
inflationary). Go figure. Read on and you decide:
As puzzling is
that the Fed continues to shrink the money supply which historically has been
hawkish. True, it had injected a lot of
liquidity into the system which now it apparently is trying to soak up---and
this may just be neutralizing maneuver. What
confuses me is that it fails to address these operations and how they apply on
overall monetary policy.
So the closest I
can get to a bottom line is that they remain hopelessly bewildered.
Bottom
line: this week’s economic numbers, especially from overseas, have been
good. On the other hand, the Fed sounds
dovish on interest rates but is acting hawkish on money supply. Finally, the Trump euphoria, in my opinion,
is the having the biggest impact on prices.
As I said yesterday, that will last, at least till inauguration. ‘Then
the rubber meets the road and the ugly political sausage making process starts. The risk being that every possible positive
outcome has been priced in. Of course,
they could all occur, but there is certainly no room for error.’
Dividend
stats for 2016 (short):
More
on valuation (short):
My thought for the day: when
an investor makes a
decision about the desirability of a stock based all or in part on what they
have previously invested (money, time or otherwise), they are suffering from
sunk-cost fallacy. No matter how much you’re down on an investment, if
it’s likely to never be recovered, then cut your losses and let it go.
Investing for Survival
Great
investors worry more about being wrong than being right,
News on Stocks in Our Portfolios
Economics
This Week’s Data
Month
to day retail chain store sales grew slightly faster than in the prior week.
December
light vehicle sales were 18.5 million units versus an anticipated 19.7 million.
The December ADP
private payroll report showed job increases of 153,000 versus consensus of up
172,000.
Weekly jobless
claims fell 28,000 versus consensus of a decline to 5,000.
Other
Trump’s
tax plan and the dollar (medium):
Inflation
and Fed policy in 2017 (medium):
Global
debt now 325% of world GDP (medium and a must read):
Politics
Domestic
Dave Barry on
our political elite (short):
Schumer on likely
Trump nominees to the Supreme Court (short):
Trump
working on reform plans for US intelligence agencies (medium):
Note: the last president to take
on the CIA was Kennedy (after its failed Bay of Pigs operations) and look what
happened to him.
International War Against Radical
Islam
Thursday
morning humor (short):
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