The Morning Call
3/8/17
The
Market
Technical
The indices
(DJIA 20924, S&P 2368) continued a very tame consolidation. Volume rose slightly, remaining at a high
level; breadth was mixed, but remained overbought. The VIX (11.5) was up another 2%, but still ended
below its 100 and 200 day moving averages (now resistance) and in a short term
downtrend and is near the lower boundary of its intermediate term trading range
(10.3)---leaving complacency at a near record high level.
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 {18913-21208}, [c] in an
intermediate term uptrend {11815-24667} 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 {2214-2546}, [d] in an
intermediate uptrend {2059-2663} and [e] in a long term uptrend {881-2561}.
The long Treasury
was down, staying below the lower boundary of that developing pennant for a
second day and negating that formation. It
is below its 100 and 200 day moving averages and in a very short term downtrend.
GLD fell and closed
just barely above its 100 day moving average (now support). Nevertheless, it ended below its 200 day
moving average (now resistance) and within a short term downtrend.
The dollar was
up, ending above its 100 day moving average (now support), its 200 day moving
average (now support), in a short term uptrend and seems to have set a new very
short term uptrend.
Bottom line: the
Averages are handling the consolidation from an overbought condition very well. The assumption continues to be that they are
headed for the upper boundaries of their long term uptrends. Bonds, the dollar and gold are all pointing
at an improving economy and a tightening Fed.
Blow
off tops. Part 1
Part
2:
Indices
at an inflexion point? (short):
Fundamental
Headlines
Two
minor datapoints were released yesterday: the January trade deficit was in line
with forecasts; month to date retail chain store sales growth slowed from the
prior week. Overseas, the numbers were
not good: fourth quarter EU GDP growth was slightly below estimates and January
German industrial orders plunged 7.4%.
***overnight,
fourth quarter Japanese GDP growth was less than anticipated.
Bottom line: I thought
that the markets did very well following the presentation of the draft of
repeal and replace Obamacare legislation.
They were certainly set up for a ‘sell the news’ response as the Trump
fiscal program made its real time debut.
Sure they were off; but relative calm prevailed. That said one day is not enough to dismiss the
‘sell the news’ notion especially given that there is a lot of back and forth
left on Obamacare and taxes and infrastructure spending measures are not even
on the table yet. My investment stance
is unchanged---cash is an asset class that should have a healthy representation
in your portfolio.
The
latest from Doug Kass (medium):
The
latest from Jeff Gundlach (medium):
My
thought for the day: never make an investment decision during an excited
state. This is your hard earned money. Emotions have no place in the realm of
financial decision making. If you need
to take a 30 minute time out, do it. Get
yourself under control. The price of
whatever security that you are considering buying/selling won’t have changed
that much; but the quality of your decision making capability will have.
Investing for Survival
The
‘too hard’ pile.
News on Stocks in Our Portfolios
Economics
This Week’s Data
Weekly
mortgage applications rose 3.3% while purchase applications were up 2.0%.
The
February ADP private payroll reports showed job increases of 298,000 versus
expectations of 183,000.
Fourth
quarter productivity rose 1.3% versus estimates of up 1.4%; unit labor costs
advanced 1.7% versus forecasts of up 1.6%.
January
consumer credit was up $8.8 billion versus consensus of up $18.3 billion.
Other
Fitch
predicts drop in oil prices (short):
Atlanta
Fed slashes its first quarter GDP estimate---again (short):
OECD
is revising its 2017 outlook for global growth down (medium):
Politics
Domestic
WikiLeaks
unveils Vault 7 (a bit long but something we should all know):
http://www.zerohedge.com/news/2017-03-07/wikileaks-hold-press-conference-vault-7-release-8am-eastern
International War Against Radical
Islam
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for Survival’s website (http://investingforsurvival.com/home)
to learn more about our Investment Strategy, Prices Disciplines and Subscriber
Service.
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