The Morning Call--Nothing happening except high stock prices

The Morning Call

4/5/17

The Market

         

    Technical

The indices (DJIA 20689, S&P 2360) managed to close up on the day, though just barely.  Volume fell; breadth improved.  The VIX (11.8) declined 4 ¾ %, ending above, but near, the lower boundary of its very short term uptrend, below its 100 day moving average (voiding the recent move above it), below its 200 day moving average (now resistance) and in a short term downtrend.  Complacency remains an issue.

               

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 {19235-21635}, [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 {2250-2583}, [d] in an intermediate uptrend {2082-2686} and [e] in a long term uptrend {905-2591}.

The long Treasury fell .5%, remaining above its 100 day moving average (now support), below its 200 day moving average (now resistance), but bouncing off a minor resistance level for the fifth time, in a very short term downtrend and in a short term trading range.

                https://www.bloomberg.com/view/articles/2017-04-04/falling-real-yields-are-the-key-to-understanding-today-s-markets

            And:

            http://www.zerohedge.com/news/2017-04-04/trumpflation-hope-brink-treasury-yields-hover-key-support-levels

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 up, 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: yesterday’s rebound in the indices was almost as weak as the recent decline.  With volume falling, it seems many investors are going to the sidelines and those that remain are fairly evenly divided between the bulls and the bears.  With all the major trends rising, the burden of proof is on the bears.  But then, they are in control of the very short term trend.  All in all, a somewhat fuzzy picture; with the question remaining, is the recent downdraft part of a consolidation move or marking a change of direction. 

           

            Update on margin debt (medium):

            http://www.zerohedge.com/news/2017-04-04/investors-leverage-hits-all-time-high

    Fundamental

       Headlines

            The US data improved somewhat yesterday: the February trade deficit was less than expected, month to date retail sales growth picked up from the prior week, while February factory orders (primary indicator) were in line.

            Overseas, the numbers continued their recent string of upbeat releases with March EU retail sales coming in slightly better than anticipated.

            ***overnight, the March UK services PMI was better than projected.

            Politics stayed in the headlines as the back and forth over healthcare reform continued (the question is, is something really happening or is the GOP putting on a front for the voters at home?) and rumors floated on the possibility of a VAT or a carbon tax; though neither seemed to gain much traction. 

            Bottom line: not much to comment on; so I will take the opportunity to observe again that equity prices are at all-time absolute and relative highs.  If you haven’t taken some money off the table, that is a mistake, in my opinion.  Good sources of funds include a portion of your winners and all of your losers.

            My thought for the day: be better at saving money than you are at spending it.

            Update on dividends (short):

            http://politicalcalculations.blogspot.com/2017/04/dividends-by-numbers-in-2017-q1.html#.WOP289IrI2w

            The latest from John Hussman (medium):

            http://www.hussmanfunds.com/wmc/wmc170403.htm

       Investing for Survival

   

            Six rules for every president.

            http://ritholtz.com/2017/03/six-rules-presidents/

    News on Stocks in Our Portfolios

 

Economics

   This Week’s Data

            Month to date retail chain store sales grew faster than in the prior week.

            February factory orders rose 1.0%, in line.

            Weekly mortgage applications fell 1.6% while purchase applications rose 1.0%.

            The March ADP private payroll report showed an increase of 263,000 jobs versus estimates of a 170,000 rise.

            https://www.advisorperspectives.com/dshort/updates/2017/04/05/first-look-at-february-march-adp-says-263k-new-nonfarm-private-jobs

   Other

            The myth of stagnant income (short):

            http://gregmankiw.blogspot.com/2017/04/the-myth-of-stagnant-income.html

            More trouble for the Italian banks (medium):

            http://www.nakedcapitalism.com/2017/04/italian-banks-not-quiet-eastern-front.html

            Unwinding the Fed’s balance sheet (short):

            http://www.zerohedge.com/news/2017-04-04/no-one-knows-how-going-work-trader-warns

            How much state debt rests on your shoulders (chart):

            http://www.zerohedge.com/news/2017-04-04/visualizing-how-much-state-debt-rests-your-shoulders

Politics

  Domestic

Bloated American higher education system (medium):

http://taxprof.typepad.com/taxprof_blog/2017/04/-the-political-economy-of-administrative-bloat-in-american-higher-education.html

  International War Against Radical Islam

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