The Morning Call
4/18/17
The
Market
Technical
The indices
(DJIA 20636, S&P 2349) rallied hard on Monday, though on shrinking volume
(one of the lightest days of the year). Plus,
while breadth improved, it was not by much and certainly didn’t reflect the
strong price performance. Both of the
Averages again ended below the upper boundaries of their very short term
downtrends. The VIX (14.6) dropped 8 ¼ %,
but remained above the lower boundary of its very short term uptrend, above its
100 day moving average (now support), above its 200 day moving average (now
support) and in a short term trading range (it closed above the former upper boundary
of its short term downtrend).
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 {19350-21635}, [c] in an
intermediate term uptrend {11942-24791} 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 {2265-2598},
[d] in an intermediate uptrend {2089-2693} and [e] in a long term uptrend
{905-2591}.
The long
Treasury declined, remaining above its 100 day moving average (now support),
below its 200 day moving average (now resistance), in a very short term
downtrend and in a short term trading range.
GLD fell,
closing above its 100 day moving average (now support), above its 200 day
moving average (reverting to support) and in a very short term uptrend. Intraday, it traded above the upper boundary of
its short term downtrend, but couldn’t sustain the challenge and closed below it.
The dollar was
down, ending above its 100 day moving average (now support), below its 200 day
moving averages (now resistance), below the upper boundary of its very short
term downtrend and in a short term uptrend.
Bottom line: stocks
rebounded yesterday. That was not too surprising
given (1) they had gotten mildly oversold and (2) traders had spent Wednesday
and Thursday last week reducing risk in front of a potentially eventful long
weekend. However, the indices remained
below the upper boundaries of their very short term downtrends and within a
fairly tight three week trading range. So
still no directional bias. Nevertheless,
the weight of the technical evidence (moving averages and major trends) favors
the bulls.
Fundamental
Headlines
Yesterday’s
economic releases were negative: the April NY Fed manufacturing index was very
disappointing and the April housing index came in below projections.
Aside
from the fact that WWIII didn’t start over the weekend, politics were also
downbeat. Mnuchin said the tax reform
would not likely occur by August---though he did suggest that the border
adjustment tax was losing support at the White House.
Bottom
line: yesterday was a mirror image of last Thursday. In the latter case, the headlines were
largely upbeat but stock prices sank.
The reverse occurred on Monday---lousy news but a strong Market.
This keeps alive
the recent trading pattern, i.e. stocks down on good news and vice versa: ‘we are at one of those points that the
technicals are going to provide more information than the fundamentals based on
the aforementioned notion that both bulls and bears are viewing those
fundamentals within the context of their preconceived constructs---bulls are
finding good in bad news and vice versa.
As long as that condition prevails, I am not sure of the informative
value of a fundamental development---not because it doesn’t provide
information, but because that information is being construed to fit a
narrative. Hence, we are not going to
know which piece of information will ultimately trigger capitulation of one
side or the other until after major resistance/support levels start getting
taken out.’
More
on valuations (medium):
My
thought for the day: invest in the Market you have, not the Market that you
want. You may not like or believe in the
current Market dynamics, but you have to respect them.
Investing for Survival
Seven
rules for life.
News on Stocks in Our Portfolios
Revenue of $2.54B (+1.2% Y/Y) misses
by $20M.
Revenue of $17.77B (+1.7% Y/Y) misses
by $240M.
Economics
This Week’s Data
The
April housing market index came in at 68 versus forecasts of 70.
March housing starts fell
7.0% versus consensus of a 2.0% decline; permits rose 0.8% versus expectations
of up 3.0%.
Other
More
on unfunded pension liabilities (short):
Bonus:
A
weak dollar is a weak president (medium):
Update
on big four economic indicators (medium):
The growing debt
problem (medium):
Counterpoint
(short):
Restaurant
sales in the tank (medium):
Politics
Domestic
International
Two
more carrier groups headed for North Korea (short):
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for Survival’s website (http://investingforsurvival.com/home)
to learn more about our Investment Strategy, Prices Disciplines and Subscriber
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