The Morning Call
6/1/17
The
Market
Technical
The indices
(DJIA 21008, S&P 2411) drifted lower again yesterday, still finishing above
their 100 and 200 day moving averages and the lower boundaries of uptrends
across all major time frames. The key technical
variable for me at the moment is that while the S&P remains above its
recent high (2402), the Dow has not (21228) yet challenged its high. In order for me to assume that the next
targets for the Averages are now the upper boundaries of their long term
uptrends, the Dow has to get through the 21228 level. Volume
rose; while breadth weakened.
The VIX (10.4) was
up fractionally, ending ended below its 100 and 200 day moving averages, now
resistance and within a short term downtrend.
However, it closed (just barely) above the lower boundaries of both its intermediate
term and long term trading ranges.
The long
Treasury was up, continuing to ignore the consequences of a June rate hike. It closed between narrowing distances its 100
and 200 day moving averages (it is closing in on the latter) and the upper
boundary of its short term downtrend and the lower boundary of its long term
uptrend.
The dollar was
down again also reflecting doubts that the economic is improving/rates are
rising. It ended below its 100 and 200
day moving averages, within a very short term downtrend and a short term
trading range.
GLD was up, finishing
above its 100 and 200 day moving averages, within a short term trading range and
is building a very short term uptrend---not the typical pin action amid fears
of increasing interest rates.
Bottom
line: the technical issue now is, will the
Dow successfully challenge its former high or will the S&P fall back,
making this latest move up a false flag?
Given how well the S&P is holding 2402, I have to assume that the
answer is the former. But even if it is
not, there is currently little danger of a trend reversal.
Update
on margin debt (medium):
Fundamental
Headlines
Yesterday’s
economic data was weak: month to date retail chain store sales, weekly mortgage
and purchase applications and April pending home sales were all disappointing;
the bright spot was the May Chicago PMI which was better than expected.
Overseas, April
EU inflation was lightly less than anticipated, the May Chinese manufacturing
PMI was flat while the nonmanufacturing PMI was better than expected; and the
BOJ said it would keep its QEInfinity purchases in place for June.
***overnight,
the May UK and EU Markit manufacturing PMI’s were above forecasts.
The
high spot of the day was the release of the minutes of the latest FOMC
meeting. The headline was the now
regular assessment that the economy was progressing at a ‘modest to moderate’
pace. It then observed that (1) consumer
spending was soft in some districts, (2) agricultural conditions were mixed,
(3) there was little pricing [inflation] pressure, but (4) the labor market
remains tight---which begs the question, how can simultaneously the labor
market be tight and there be no wage growth [inflation]? Ah, the joys of writing your own narrative
uncluttered by the facts. In any case,
the consensus among the chattering class is to expect a June rate hike---just
don’t tell that to the bond guys.
Bottom line: the
Fed gave its usual performance---(1) stating that ‘all is well’, (2) but
pointing out the problems that challenge an ‘all is well’ narrative and (3)
then concluding that in spite of ‘all not being well’, it will continue on its
predetermined path. I want that job:
ignore the facts, make sh*t up, do what you please, have the media hang on
every word and get paid a butt load of money.
My belief remains that these people are going to wreck the
Market---again.
Dear
Fed, it is not hard to spot a bubble (medium and a must read):
Summary of first quarter
earnings, from a bull (medium):
My thought for the day: why are you trying to
manage your own money? Is it that you love doing it? Is it the “thrill of
the chase and the agony of defeat” syndrome? Or, did you just think that
is what you are supposed to do? It's a fair question, you've
probably been asked it before, you've probably even got a well thought out
answer. However, the real question that you need to ask yourself is “Am I successful at managing the
future of my family and my retirement?”
Successful investors search for value. They leverage advantage. They
look for small truths and they hope other people don't notice. They manage risk, and expect rewards for playing well. They like the
sport. They like knowing.
Average investors (gamblers) are people who either don't know what they
are doing, or like to bet against the odds.
Subscriber Alert
The
stock price of 3M (MMM-$204) has traded into its Sell Half Range. According the Dividend Growth and High Yield
Portfolios will Sell Half of their positions at the Market open.
Investing for Survival
Volatility
and returns.
News on Stocks in Our Portfolios
Economics
This Week’s Data
Weekly
mortgage applications fell 3.4% while purchase applications were down 1.0%.
The
May Chicago PMI came in at 50.4 versus consensus of 57.5.
April
pending home sales declined 1.3% versus expectations of a 0.5% increase.
The May ADP private
payroll report showed a gain of 79,000 jobs versus estimates of a 7,000 decline.
Weekly
jobless claims rose 13,000 versus projections of a 5,000 increase.
Other
One
more look at durable goods (medium):
What
the demise of oil could look like (medium):
The
bubbles in unfunded pension liabilities and government promises/entitlements
(medium):
Crude
oil prices drop as OPEC compliance wans (short):
More
on auto loans (medium):
Politics
Domestic
Why people
prefer unequal societies (short):
Comey to testify
(short):
International War Against Radical
Islam
Are
we fighting or creating terrorism? (medium):
Visit Investing
for Survival’s website (http://investingforsurvival.com/home)
to learn more about our Investment Strategy, Prices Disciplines and Subscriber
Service.
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