The Morning Call
6/22/17
The
Market
Technical
The indices
(DJIA 21410, S&P 2435) were off again yesterday, though not by much. However, it was enough to close Monday’s gap
open---eliminating this factor as pressure to the downside. They retain their upward momentum 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 24198/2763. Volume declined; breadth was weaker though it
remains in a positive zone.
The VIX (10.8) was
off fractionally, leaving it between the lower boundaries of its intermediate
and long term trading ranges on the downside and its 100 and 200 day moving
averages on the upside. (must read)
The long
Treasury was strong again, finishing above its 100 and 200 day moving averages
(now support) and in a short term trading range---continuing to reflect bond
investors’ doubts about a strong economy/rising inflation.
The Fed versus
the bond market (medium and today’s must read):
The dollar fell,
ending in a very short term downtrend and below its 100 and 200 day moving
averages and lending little support to the strong economy/rising inflation
scenario.
GLD was up, closing
below the upper boundary of its short term trading range, below its 100 day
moving average for the third day, reverting to resistance but back above its 200
day moving average---a slight improvement to an ugly chart.
Bottom line: the
Averages satisfied the need to close Monday’s gap opening, removing about the
only technical factor suggesting lower prices.
There seems little reason to be concerned about the long term,
technically speaking, except for the troublesome decline in Treasury rates and
the flattening yield curve.
Fundamental
Headlines
Yesterday’s
economic stats were upbeat: May existing home sales were much stronger than
anticipated; weekly mortgage applications were up, though purchase applications
were down.
Overseas
news was highlighted by a reversal of Tuesday’s news: (1) the BOE’s chief
economist directing contradicted [rate increases needed] the comments of head
of the bank made the prior day and (2) China attempted to un-invert its bond
yield curve.
Falling
oil prices remain center stage (short):
There
was more at play than just supply/demand: a change in succession in Saudi
Arabia (medium):
What
that means (medium):
Bottom line: the
numbers so far this week have been upbeat, though not enough to get me
jiggy. Oil now has everyone’s attention,
especially with respect to its implications for the economy. While some pundits are still trying to sell
the ‘unmitigated positive’ line, recent history suggests ‘wishful thinking’. That said, if the rising geopolitical tensions
in the Middle East lead to an escalation of violence, the price of oil could be
the least of our worries.
The rest of the
news flow seems like white noise: the
deteriorating relations with Russia, the coming senate bill reforming
Obamacare, the implications of the GOP win in Georgia.
Investors remain
in a joyous mood and there is no sign that state of mind is going to end
anytime soon. So enjoy the ride; but
please exercise some discipline and take some profits. The only way that you can buy low is to sell
high.
Update
on valuations (medium):
My
thought for the day: losses are simply the cost of doing business; it is the
price you pay for the chance to make winning investments. The key is having the discipline to keep the
losses small and knowing the price at which to take profits. It is not about being right or wrong, it is
about being agnostic about everything except not taking big losses and letting
profits run.
Investing for Survival
Go
to the gym and watch your expenses.
News on Stocks in Our Portfolios
Accenture (NYSE:ACN):
Q3 EPS of $1.52 in-line.
Revenue of $8.87B (+5.2% Y/Y) beats
by $40M.
Revenue of $10.9B (+2.8% Y/Y) beats
by $450M.
Economics
This Week’s Data
May
existing home sales rose 1.1% versus expectations of a 0.3% decline.
Weekly jobless claims
rose by 3,000, in line.
Other
The
tax data on wages and salaries (short):
More
on student loans (short):
Does
anyone know what is going on in the EU banks? (medium):
Demography
and economic growth (medium):
The
ECB updates its bond purchase program (medium):
http://www.zerohedge.com/news/2017-06-21/ecb-reveals-15-its-bond-purchases-directly-funded-companies
Clarity
or confusion at the Fed (medium):
The
reason the Fed is hiking rates (medium):
Politics
Domestic
US military
running out of steam? (medium):
International
Tensions continue between the US and
Russia (medium):
State Department’s reply (short):
Sabers
keep rattling (medium):
http://www.zerohedge.com/news/2017-06-21/nato-jet-menaces-aircraft-carrying-russian-defense-minister
This article focuses on the EU
involvement in Syria; but it applies equally to the US, in my opinion (medium
and a must read):
A little history on the US
involvement in the affairs of other governments, in this case 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