The Morning Call
1/10/17
The
Market
Technical
Yesterday, the
indices (DJIA 19887, S&P 2268) rested again. Volume was down slightly but is still
high. Breadth weakened modestly. The VIX (11.6) rose 2 %, but still closed
below its 200 day moving average (now resistance), below its 100 day moving
average (now resistance), within a short term downtrend and remains close to
the lower boundary of its intermediate term trading range (10.3).
The Dow ended
[a] above its 100 day moving average, now support, [b] above its 200 day moving
average, now support, [c] in a short term uptrend {18429-20469}, [c] in an
intermediate term uptrend {11685-24535} and [d] in a long term uptrend
{5730-20318}.
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 {2149-2493},
[d] in an intermediate uptrend {2019-2621} and [e] in a long term uptrend
{881-2435}.
The long
Treasury resumed its climb but 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). It still has plenty of room to rebound before
it meets any of the multiple resistance levels or threatens to break any major
downtrends.
GLD continued to
mimic TLT, moving higher 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).
Also like TLT, it can recover significantly before threatening to
challenge major resistance/downtrends.
The dollar declined,
continuing its pattern of acting in reverse of GLD and TLT, finishing
considerably above multiple support levels---so it can fall a lot and not
challenge its 100 or 200 day moving averages (now support) or its short term
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.
TLT, GLD and UUP continue to rebound from
extreme positions. Part of this is
related to the turmoil in the Chinese and Mexican currency markets, part of it
seems to be function of waning optimism among the bond boys about the strength
of any impact of the Trump/GOP fiscal/regulatory reforms. Clearly the latter is in direct conflict with
the giddy attitude of stock investors. I
am not saying who is right; just that there appears to be some dissention in
the ranks.
Yesterday
in the charts (medium):
Fundamental
Headlines
US
economic data was mixed yesterday: the December labor market condition index was
a disappointment; November consumer credit was up---depending on your point of
view that could be good (consumer continuing to spend) or bad (consumer just
shot its wad).
Overseas,
the numbers were also mixed: November German industrial production was below
estimates, while exports were ahead of forecasts; Italian unemployment rose
again; EU investor sentiment advanced.
Bottom
line: there was not a lot of info in the
stats, though a mixed picture on the international front continues the support
the notion that the global economy could be stabilizing.
Trump cabinet
nominees start working their way through the congressional approval process
this week. I mention it only because it
will provide an initial look at just how obstructionist the dems are going to
be and how effective that strategy will be---which would in turn be an early
read on the reasonableness of the Trump euphoria.
My
thought for the day: intuitively, we think that the more choices we have, the
better. However, the sad truth is that too many choices can lead to decision
paralysis due to information overload. In other words, the more choices an
investor has, the fewer investments he/she makes. It is also why they rely on old rules of
thumb rather than doing their homework---not a prescription for success.
Investing for Survival
January
advice.
News on Stocks in Our Portfolios
Economics
This Week’s Data
The
December labor market condition index came in at -0.3 versus the November
reading of 1.5.
November
consumer credit expanded $24.5 billion versus expectations of $18.5 billion.
The December
small business optimism index rose to 105.8 versus estimates of 99.6.
Other
Can
Trumponomics fix was is broken? (medium):
Social
security taxes set to rise in 2017 (short):
On
the recent great rise in worker earnings (medium):
Politics
Domestic
Trump delays
repeal of Obamacare (medium):
http://www.zerohedge.com/news/2017-01-09/trump-backs-delay-obamacare-repeal-after-pressure-rand-paul
International War Against Radical
Islam
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