The Morning Call
3/7/17
The
Market
Technical
The indices
(DJIA 20954, S&P 2375) continued to consolidate after Wednesday’s strong
performance. Volume fell, but remained
at a high level; breadth was mixed, but remained overbought. The VIX (11.2) was up 2 ½ %, but still ended
below its 100 and 200 day moving averages (now resistance) and in a short term
downtrend but 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 {18893-21194}, [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 {2211-2545}, [d] in an
intermediate uptrend {2059-2663} and [e] in a long term uptrend {881-2561}.
The long Treasury
was down, falling below the lower boundary of that developing pennant for a
second time; if it remains there through the close today, that formation will
be negated. It is below its 100 and 200
day moving averages and in a very short term downtrend.
GLD fell but
still closed 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
averages (now support), in a short term uptrend and seems to have set a new
very short term uptrend.
Bottom line: the
Averages’ pin action is surprisingly upbeat given the extent of their overbought
condition. Nothing to fear here. The assumption has 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.
Fundamental
Headlines
One
US datapoint was released yesterday: January factory orders were slightly above
estimates, though they were down versus the December reading. Overseas, the January investor sentiment came
in at a decade high; fourth quarter Greek GDP fell 1.2%.
***overnight,
fourth quarter EU GDP growth was slightly below estimates; January German
industrial orders plunged 7.4%.
Forgetting
for the moment that most of our political class and all of the media are
running around with their hair on fire, this week will be a slow one as far as
the numbers go. Any attention that gets
paid to economics and valuations will likely be centered on:
(1)
the upcoming ECB
(this week) and Fed (next week) meetings.
Both have signaled their intent; so there shouldn’t be any surprises,
(2)
the just released GOP ‘repeal and replace’ version of
Obamacare. We don’t know many of the
particulars just yet. But that shouldn’t
take long.
And:
Bottom line: markets
have been happy with the generalized prospects of at least some improvement in
fiscal policy under Trump, a Fed that is very Market friendly and an economy
that is growing however erratic that might be.
With the introduction of Obamacare reform, the rubber is now the meeting
road on item number one. Let’s see how
investors react when the sausage making is in the headlines daily.
The third time
is a charm (medium):
My
thought for the day: as investors, we are constantly bombarded with ads touting
a ‘new’ system in trading that lead its developer to untold wealth. Let’s be kind and assume that this ‘new’ system
works for the guy that developed it and he made all the money he was purported
to have made. Any trading system is
simply a process of digesting data and applying it in a way that gives the
trader an advantage. So again, assume it
works. How long do you think it will
work after 100,000 or 200,000 traders start processing the same set of data
applying the ‘new’ system? Hint: a
nanosecond. Let me tell you, if I came
up with a system that consistently outperformed other strategies by a wide
margin, I wouldn’t tell a soul.
Investing for Survival
Most
seniors are making a big retirement mistake.
News on Stocks in Our Portfolios
Revenue of $808M (-0.1%
Y/Y) beats by $5.41M.
The quarterly payout for
Qualcomm was lifted 7.5% to $0.57 per share from $0.53. The
annualized yield is now 4%.
Economics
This Week’s Data
January
factory orders rose 1.2% versus expectations of up 1.1%.
The
January US trade deficit was $48.5 billion, in line.
Growth
in month to date retail chain store sales slowed last week.
Other
For
the optimists (medium):
The
case against the border adjustment tax (medium):
The
implications of the ECB’s QE on countries who may want to exit (medium):
Politics
Domestic
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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