The Morning Call
4/7/17
The
Market
Technical
The indices
(DJIA 20662, S&P 2355) drifted higher yesterday. This pin action was a pretty weak follow
through to Wednesday’s big intraday reversal, leaving the Averages below the
upper boundaries of their very short term downtrends. Volume fell; breadth was
mixed. The VIX (12.4) declined 3 ¾ %, but
ended above the lower boundary of its very short term uptrend, back above its
100 day moving average for the second day (now resistance; if it remains there
through the close today, it will revert to support), 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 {19268-21635}, [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 {2254-2587},
[d] in an intermediate uptrend {2082-2686} and [e] in a long term uptrend
{905-2591}.
The long
Treasury was down fractionally, remaining above its 100 day moving average (now
support), below its 200 day moving average (now resistance), near a minor
resistance level, in a very short term downtrend and in a short term trading
range.
And:
GLD was
unchanged, 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 declined,
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: the
tentative character of this recent Market was manifest again in yesterday’s
trading---not much follow through to Wednesday’s reversal, but little movement
in the opposite direction. On the other hand,
the news flow gave investors plenty of reason to sell and that didn’t happen. Still, the very short term downtrend remains
intact. It seems like no matter the
import of a headline (development), it is not enough to jar either buyers or
sellers loose from their pre-existing investment scenarios. So it would appear that it will take
something extraordinary to break that mindset.
Smart
money versus dumb money (medium):
The
value of technical indicators (short):
Fundamental
Headlines
Yesterday’s
economic data was mixed: weekly jobless claims declined more than expected
while March retail chains store sales fell from the February pace.
Overseas,
the March Chinese services and composite PMI’s hit a six month low; Greece may
be near to receiving its next round of bail out funds and the ECB took a lesson
out of the Fed’s playbook with two officials simultaneously advocating changing
and not changing monetary policy.
However,
politics once again were the main headline.
First the GOP held another ‘we are really working hard to amend
healthcare’ news conference. Again
whether they mean it or are just trying to be able to tell their various constituencies
that they are making progress when they go on Easter break next week is anyone’s
guess. But it gives the dreamweavers something
to cling to.
Second,
international politics moved to center stage as:
(1)
the US retaliated to the recent alleged gas attack on
civilians by the Syrian government. What
has me both mystified and concerned by this action is that during Trump’s
campaign, he repeatedly berated Bush for getting involved in Iraq and Obama’s
actions in Libya. Then recently, the
administration stated that regime change is Syria was not a prerequisite for a
solution. Kudos to him.
Now suddenly the US is morally outraged by civilian
casualties in Syria to which incidentally, whether deliberately or not, it has
made a major contribution. I am assuming that in light of Trump’s aforementioned
statements, this action was likely as much a [here’s how big my Johnson is] message
directed at the Russians and the dems/media [who have accused him of being pro
Russian] as the Syrians. The question
now is, how will the Russians [and Iranians, another big Assad supporter] react?
Ron Paul’ thoughts (short):
(2)
President XI arrived yesterday to spend the weekend
with Trump. Following the recent missile
shots by the North Koreans who are a client state of the Chinese, that is apt
to be a major discussion point. To be
sure the Koreans are a whacky lot and highly unpredictable, making them also a
dangerous lot. I have no clue how this
plays out but it is a volatile situation that carries risk.
Bottom line: as I
noted above, it seems that both bulls and bears are choosing to interpret
economic as well as political events within the prism of their own
bullish/bearish perspective; and at the moment, they seemed to be pretty evenly
divided in terms of buying/selling power.
Figuring out what breaks this psychological standoff is over my paygrade. Whichever way prices break, in my opinion, the
most powerfully overwhelming consideration in determining the magnitude of any
directional move is the extent of the current overvaluation of equities.
Other
problems with our healthcare system as it currently exists (short):
The
latest from Doug Kass (medium):
For
the bulls (short):
http://politicalcalculations.blogspot.com/2017/04/order-chaos-and-bubbles-in-s-500.html#.WOaaO9IrI2w
Investing for Survival
Myths
in investing #9.
News on Stocks in Our Portfolios
Economics
This Week’s Data
Year
over year retail chain store sales were lower in March than in February.
March
nonfarm payrolls grew by 98,000 versus estimates of 170,000.
Other
Head
of National Economic Council supports bringing back Glass Steagal (medium):
OPEC’s number 2 plans
major increase in production (medium):
Politics
Domestic
GOP triggers
nuclear option (medium):
International War Against Radical
Islam
Congress
imposes new sanctions on Iran (medium):
Visit Investing
for Survival’s website (http://investingforsurvival.com/home)
to learn more about our Investment Strategy, Prices Disciplines and Subscriber
Service.
No comments:
Post a Comment