The Morning Call
6/16/17
The
Market
Technical
The indices
(DJIA 21359, S&P 2432) were off big intraday but recovered to turn in only
small losses by the close. Nevertheless,
both are in solid uptrends as defined by their 100 and 200 day moving averages
and uptrends across all timeframes. At
the moment, I see nothing, technically speaking to inhibit the Averages’
challenge of the upper boundaries of their long term uptrends---now circa
24198/2753. Volume rose and breadth
weakened but is still positive.
The VIX (10.9)
was up 2 1/2 %. Intraday, it traded
through its 200 day moving average but finished below it as well as its 100 day
moving average and above the lower boundaries of its intermediate and long term
trading ranges.
The long
Treasury was off slightly, finishing above its 200 day moving average for the
second day (if it remains there through the close on Monday [I mistakenly said
Tuesday in yesterday’s Morning Call], it will revert to support) and right on
the upper boundary of its short term downtrend (if it remains there through the
close on Monday, it will reset to a trading range; if it successfully
challenges that boundary, it will also break out of the developing pennant
formation---a positive, technically speaking).
And
(medium):
The dollar
rebounded 0.5%, providing the first sign of life since mid-May. Nonetheless, it ended in a very short term
downtrend, below its 100 and 200 day moving averages and its chart still has an
unhealthy look.
GLD fell, ending
below the upper boundary of its short term trading range but above its 100 and
200 day moving averages with the 100 day moving average now above its 200 day moving average (usually a positive
technical signal).
Bottom line: stocks
have had a lot to digest this week: a slew of economic data, an unexpectedly
less dovish Fed and an unfolding soap opera in Washington that rivals anything
on afternoon TV and have done a decent job in maintaining their cool. Of course, as I constantly point out, as long
as all news is good news, then this all is to be expected.
TLT and UUP did
some consolidation work but both charts seem to be suggesting that their investors
are less optimistic about the economic outlook as implied by stocks (and the
Fed). I remain unsure how to interpret all of this
as it relates to fundamentals.
Fundamental
Headlines
Yesterday’s
economic data had a more upbeat tone than earlier in the week: weekly jobless
claims dropped more than anticipated, the June Philly and NY Fed’s
manufacturing indices were better than expected and May import and export
prices declined (that could be interpreted either way depending on your perspective. If you like lower prices, it is good; if you
are worried about recession, not so much).
On the other hand, May industrial production and the June housing index
were below estimates---the former assures that the primary indicators this week
will be negative.
***overnight,
the Bank of Japan met, left rates unchanged and reiterated that its devotion to
QEInfinity.
Bottom
line: the economic dataflow is not improving, the Fed continues to tighten in
spite of that and our entire political class seems to have a death wish which
is not major plus for the enactment of the Trump/GOP fiscal plan. This may all end in story book fashion but it
seems prudent to me to hedge that outcome by selling a portion of big winners
and all of the losers in a portfolio---recognizing that on a short term basis
you are going to look stupid.
My
thought for the day: it is important to
develop a very strict Buy/Sell discipline which provides an investor with an
element of self-confidence that will sustain and guide him/her us in an
uncertain environment.
Investing for Survival
How
to lose money in stocks.
News on Stocks in Our Portfolios
Economics
This Week’s Data
May
industrial production was flat with April versus an expected 0.2% increase.
The
June housing market index came in at 67 versus estimates of 70.
May
housing starts fell 5.5% versus forecasts of up 4.3%; permits declined 4.8%
versus projections of up 1.6%.
Other
An
alternative look at national well-being (short):
EU and Greece reach a
deal on the next bailout tranche (medium):
The latest from my
favorite optimist (medium):
Chinese lie again
(medium):
Politics
Domestic
International
Germany,
Austria slam US sanctions against Russia (medium):
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