The Morning Call
3/1/17
The
Market
Technical
The indices
(DJIA 20812, S&P 2363) had their first down day in a couple of weeks. But the decline was not that pronounced and
certainly within the parameters of mild consolidation process. Volume spiked (for the first time in eight
days), remaining at a high level; breadth weakened further. The VIX (12.9) surged another 7 %, but still
finished below its 100 (it is closing in on this resistance level) and 200 day
moving averages (now resistance), in a short term downtrend and in the trading
range dating back to mid-January. Despite the pin action of the last two days, it
continues to signal complacency at a near record high level.
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 {18863-21103}, [c] in an
intermediate term uptrend {11788-24640} 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 {2206-2540},
[d] in an intermediate uptrend {2053-2657} and [e] in a long term uptrend
{881-2561}.
The long
Treasury was up, pushing back above the upper boundary of a developing pennant
formation; whether or not it can successfully challenge this trend line would
give us a hint on the bond guys’ attitude toward Trumpflation (a stronger
economy, higher interest rates and higher inflation). It remained in a very short term downtrend,
near the lower boundary of its short term trading range and below the 100 day
moving average (now resistance), falling further below its 200 day moving
average (now resistance).
GLD rose
fractionally, continuing to try to improve its chart. It did close within a very short term uptrend
and above its 100 day moving average (now support). However, it remained below, but near, its 200
day moving average (now resistance) and within a short term downtrend.
The dollar declined,
ending above its 100 day moving average (now support), its 200 day moving
averages (now support) and in a short term uptrend.
Bottom line: despite
the modest sell off, the Averages remain poised to continue their upward path,
ultimately challenging the upper boundaries of their long term uptrends.
Institutional
selling (short):
http://www.zerohedge.com/news/2017-02-28/bofas-institutional-clients-are-suddenly-selling-everything
Fundamental
Headlines
Yesterday
was both busy and upbeat in US data land: month to date retail chain store
sales, the December Case Shiller home price index, the February Chicago PMI,
February consumer confidence and the February Richmond Fed manufacturing index
were all ahead of expectations while revised fourth quarter GDP and the January
trade deficit were below estimates.
Overseas,
there was only one datapoint but it was a positive: the French fourth quarter
GDP was much better than anticipated.
***overnight,
the February Chinese manufacturing PMI rose from the prior month while the
services PMI declined; the February EU manufacturing PMI was up versus January
while the UK manufacturing PMI was down.
The
Fed was out in force with multiple speakers suggesting that a March rate hike
was in the cards. In the bond pits, the
odds of such an occurrence spiked to 80%.
Most
of the Market’s time and energy yesterday was spent contemplating the Donald’s
speech last night with seemingly no consensus on he what would say except in
general terms.
Bottom
line: I am sticking with my conclusion in yesterday’s Morning Call---if the
Donald’s speech consists of generalities, I think that the Market can continue
to tip toe through the tulips; the more specific he is, the more likely it is
that the Market will take a break. I
continue to think that not owning a decent cash position at this time is a huge
mistake.
***overnight,
Trump delivered the goods. To his
credit, he sounded more presidential than ever before; but his call for
sweeping new programs was woefully short of details.
My
thought for the day: good investors know to let their profits run; great
investors know how to cut their losses short.
Investing for Survival
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the game
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Economics
This Week’s Data
Month
to date retail chain store sales grew faster than in the prior week.
The
December Case Shiller home price index rose 0.9% versus expectation of up 0.7%.
The
February Chicago PMI came in at 57.4 versus estimates of 53.0.
February
consumer confidence advanced to 114.8 versus forecasts of 111.3.
The
February Richmond Fed manufacturing index was reported at 17 versus 12 recorded
in January.
Weekly mortgage
applications rose 5.8% while purchase applications were up 7.0%.
January
personal income was up 0.4% versus consensus of up 0.3%; but personal spending
increased 0.2% versus expectations of up 0.3%.
Other
The
coming pension tsunami (medium and a must read):
Addendum
(medium):
Politics
Domestic
International War Against Radical
Islam
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