The Morning Call
4/4/17
The
Market
Technical
The indices
(DJIA 20650, S&P 2358) staged another late day comeback to finish only
modestly down. Volume fell; breadth deteriorated. Of particular note was the breakdown in the
flow of funds chart. The VIX (12.3) declined
fractionally, ending above the lower boundary of its very short term uptrend,
above its 100 day moving average for the second day (now resistance; but if it
closes there today, it will revert to support), below its 200 day moving
average (now resistance) and in a short term downtrend. Its rebound leaves complacency on the table.
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 {19224-21635}, [c] in an
intermediate term uptrend {11891-24743} and [d] in a long term uptrend {5751-23390}.
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 {2248-2581},
[d] in an intermediate uptrend {2077-2681} and [e] in a long term uptrend {905-2591}.
The long
Treasury was up .75%, remaining above its 100 day moving average (now support),
below its 200 day moving average (now resistance), nearing (again) a minor
resistance level, in a very short term downtrend and in a short term trading
range.
GLD rose, closing
above its 100 day moving average (now support), below but nearing its 200 day
moving average (now resistance) and within a short term downtrend.
The dollar was
unchanged, ending below its 100 day moving average (now resistance), above but
near its 200 day moving averages (now support), in a very short term downtrend
and in a short term uptrend.
Bottom line: while
the indices were down and remain in very short term downtrends, sellers still
can’t sustain major price weakness---likely meaning that buyers are still willing
to step in and buy the dips. That said,
the question remains, is the recent downdraft part of a consolidation move or
marking a change of direction.
Yesterday, bonds,
gold and oil pin action suggested that their investors are concerned about economic
weakness; but their prices have been vacillating between that scenario and the
Trumpflation trade.
Insider
selling hits six year high (medium):
Fundamental
Headlines
Not
a good day in US data land: the March ISM manufacturing index was slightly
above expectations but the March Markit manufacturing PMI, February
construction spending and March light vehicle sales were below forecasts
Overseas,
it was a different story: the March Japanese and Chinese manufacturing PMI’s
were up but below estimates; the March EU countries manufacturing PMI’s were
above expectations.
***overnight,
March EU retail sales were slightly better than anticipated.
The
US stats captured the most investor attention yesterday, though the coming
weekend’s Trump meeting with Chinese president Xi took some headlines and is
likely to gain focus as the week wears on.
***overnight,
Trump renews push for healthcare reform (medium):
Bottom
line: as you know, I have been less enthused with the US economic outlook than
many others on the Street and yesterday’s numbers support that point of
view. Of course, one day does not a
trend make. Plus, I have acknowledged
that the post-election improved sentiment seemed to be having a positive impact
on first quarter stats---although, said more accurately, all it did was halt
the deterioration in economic activity. It
never clearly portrayed sustained growth.
So the question is, was yesterday’s data a one off event or is the Trump
euphoria wearing off and the longer term factors like lousy fiscal and monetary
policies reasserting themselves in the numbers?
My
thought for the day: someone once said that if you’re
playing poker and you can’t tell who the sucker is, it's likely you. The same
can be said for investing; you always want to know what the person on the other
side of your trade is thinking, even if---and particularly if---you disagree
with it.
Investing for Survival
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Economics
This Week’s Data
The
March Markit manufacturing PMI came in at 53.3 versus February’s reading of
54.2.
The
March ISM manufacturing index was reported at 57.2 versus expectations of 57.1.
February
construction spending rose 0.8% versus estimates of up 1.0%.
March
light vehicle sales fell short of forecasts---the lowest level since June 2016.
The February trade
deficit fell to $43.6 billion versus consensus of $44.5 billion.
Other
The
power of oil (medium and a must read):
Plus,
can OPEC hold together (medium):
The
economy is ruined for many Americans (medium):
Corporate
defaults rise in China (medium):
http://www.zerohedge.com/news/2017-04-03/china-starts-2017-highest-number-corporate-defaults-history
Abe
advisor says that it is time to pull the plug on QE (medium):
Politics
Domestic
International War Against Radical
Islam
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