The Morning Call
3/15/17
The
Market
Technical
The indices
(DJIA 20837, S&P 2365) drifted lower yesterday. Volume declined but remained
at a high level; breadth was weak. The
VIX (12.3) popped 8 ¼ %, ending close to, but still below, its 100 day moving
average (now resistance). In addition,
it was below its 200 day moving average (now resistance), in a short term
downtrend but in a very short term uptrend---remaining in a rebound off the
lower boundary of its intermediate term trading range. That could be a sign that the high level of
complacency is over; but the VIX needs to start breaking resistance levels
before we can have any conviction that is the case.
The Dow closed
[a] above its 100 day moving average, now support, [b] above its 200 day moving
average, now support, [c] in a short term uptrend {19028-21283}, [c] in an
intermediate term uptrend {11837-24689} and [d] in a long term uptrend
{5751-23298}.
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 {2223-2557},
[d] in an intermediate uptrend {2065-2669} and [e] in a long term uptrend
{881-2561}.
The long
Treasury was up 0.5%, bouncing off of the lower boundary of its short (I
incorrectly said intermediate in yesterday’s recount) term trading range. It is also below its 100 and 200 day moving
averages and in a very short term downtrend. Despite TLT’s upbeat performance
yesterday, the rest of the fixed income complex was down.
GLD rose 0.5%, closing
below its 100 day moving average (now resistance), its 200 day moving average
(now resistance) and within a short term downtrend.
The dollar was
up, ending back above the lower boundary of the recently (Monday) reset very
short term uptrend. That raises the
issue as to whether the break of that boundary was real or a false flag. While follow through always provides the
answer, the fact that it is above its 100 day moving average (now support), its
200 day moving average (now support) and in a short term uptrend, suggests the
latter.
Bottom line: to
all appearances, the Averages are handling the consolidation from an overbought
condition very well. So the assumption continues to be that they are headed for
the upper boundaries of their long term uptrends. However, the pin action in the commodities,
oil, gold and bonds continues to raise questions about the validity of that
assumption.
The
latest from Doug Kass (medium):
Warning
from a chartist (medium):
Fundamental
Headlines
Yesterday’
economic stats were marginally positive: month to date retail chain store grew
faster than in the prior week, the February small business optimism index was
up fractionally and the headline February PPI as well as the ex food and energy
numbers were higher than forecast.
Overseas,
the British parliament approved Brexit talks; February Chinese retail sales fell
short of estimates while industrial production was above expectations.
In
other news:
(1)
oil continued to fall.
Don’t forget both the economic and Market action following the last ‘unmitigated’
positive oil price decline (medium):
(2)
the Donald issued an executive order for the comprehensive
reorganization of the executive branch; kudos for the D. So far his executive orders have been the
sole economic positive; the rest is ‘on the come’. (medium):
(3)
the March
FOMC meeting began, will wrap up today and a 25 basis point in the Fed Funds
rate is expected.
(4)
finally, the Dutch go to the polls today opening the possibility
of electing another anti-EU party.
Bottom line: if history is any guide, it seems reasonable to
assume that a continuation of the decline in oil prices may not be a Market
friendly development. In addition, with
the debate on Trumpcare now live and commanding lots of media space, the period
in which investors were free to feel all warm and fuzzy about the Trump fiscal
agenda may be coming to an end. Either
or both may hamper further progress to newer highs.
On the other
hand, over the last two years, I have continually underestimated the Markets
willingness to see a silver lining that was not that obvious to me. So I have to go with my technical bottom line. Meaning that until the Market yells ‘uncle’, I
have to assume that it will continue to ignore potential bad news and push
stock prices higher. That said, if I held
any stock that had been a big winner, I would sell a portion of that holding;
and I would eliminate all my losers.
The latest from
David Stockman (medium):
Shiller
worried about equity valuations (medium):
My thought for the day: the
analyst who talks about his mistakes is the guy you want to listen to. Avoid
the guy who doesn't -- his are much bigger.
Investing for Survival
Myths
of investing #7
News on Stocks in Our Portfolios
Economics
This Week’s Data
Month
to date retail chain store sales grew faster than in the prior week.
Weekly
mortgage applications were up 3.1% while purchase applications rose 2.0%.
February
CPI was up 0.1%, in line, ex food and energy, it was also in line.
February
retail sales rose 0.1%, in line; ex autos, it was up 0.2% versus estimates of
up 0.3%.
The
March NY Fed manufacturing index came in at 16.4 versus forecasts of 15.4.
Other
A
couple of questions Trump should be asking economists (medium):
More
on the growing pension funding problem (medium):
Politics
Domestic
International War Against Radical
Islam
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