The Morning Call
6/13/17
The
Market
Technical
The indices
(DJIA 21235, S&P 2429) were down on the day. But the Dow remained above its former high (second
day) and the S&P’s follow through from Friday’s outside down day was very feeble. That seems to indicate that Friday’s pin actin
was much ado about nothing, and as a result, supports my conclusion that the
move up is not over. Volume was up and
breadth was weak.
Unlike the
S&P, the VIX (11.5) did have some follow through from its Friday outside up
day, gaining 7%. Intraday it tested its
100 day moving average but failed to close above it. It remains below its 200 day moving average
and in a short term downtrend.
The long
Treasury was down slightly (again), leaving it below its 200 day moving average
but above its 100 day moving average and in a very short term uptrend. The gap between the upper boundary of its
short term downtrend and lower boundary of its long term uptrend continues to
narrow.
The dollar was
also down, leaving its chart with an ugly look---ending in a very short term downtrend
and below its 100 and 200 day moving averages.
GLD fell
further, but finished above its 100 and 200 day moving averages. Plus, the 100 day moving average is about to
cross above its 200 day moving average which is usually a positive technical
signal. However, this chart is getting a
bit ugly. It is somewhat unusual for GLD
and UUP to both be forming negative chart patterns since they tend to trade
inversely (weak dollar = strong gold).
Bottom line: yesterday
was a bit anticlimactic following the indices’ unusual pin action on Friday,
leaving intact my assumption that the momentum remains to the upside. Bonds, gold and the dollar turned in a mixed
overall performance.
Fundamental
Headlines
Yesterday
was a slow for economic data: one US stat---the May federal deficit was larger
than had been expected. However, things
will heat up later this week as we will get several primary indicators as well
as the FOMC meeting. Nothing overseas.
***overnight,
May German investor confidence unexpectedly declined; May UK CPI came in hotter
than anticipated.
The
media circus that is our political class continues as the congressional
hearings on possible Trump infractions resume, the Donald tries to snatch
defeat from the jaws of victory as he blasts Comey after his testimony revealed
no Trump wrong doing and now two state attorneys general are filing suit
against Trump alleging his business assets represent a conflict of interest and
are unconstitutional. It is hard to see
a lot of progress on the Trump/GOP fiscal agenda in the midst of this
ridiculous atmosphere.
Treasury
releases proposed changes in bank regulation (medium):
More on Dodd
Frank (medium):
Even more
(medium and a must read):
Bottom
line: historically, I have been a big fan of political gridlock simply because
I believe, in general, that the best legislation is no legislation. And that could very well be case here, if the
Trump/GOP agenda would increase the federal debt/deficit. However, I don’t think that all those
dreamweavers out there are buying stocks because the economy and corporate profits
are going to grow in the absence of Trump/GOP fiscal program.
Of course, as long
as all news is good news, none of this will matter; and until some factor
alters current Market psychology, investors will likely continue to bid up
stock prices as they have been for the last two years.
Animal
spirits are a late stage occurrence (medium):
My
thought for the day: at times, it may seem as if the market is out to get you.
But that’s not the case. It’s your own mental framework that determines how
you perceive the information and whether or not you can be respond
unemotionally to the data and take advantage of whatever the market is
offering.
Investing for Survival
The
all or nothing bias.
News on Stocks in Our Portfolios
Economics
This Week’s Data
The
May federal budget deficit was $88.4 billion versus forecasts of $87.0 billion.
The May small
business optimism index came in at 104.5 versus expectations of 104.0.
May PPI was
reported at 0.0% versus estimates of +0.1%; ex food and energy, it rose 0.3%
versus consensus of +0.2%.
Other
How
the next financial crisis won’t happen (medium):
Global
credit growth is slowing (medium):
OPEC
oil production the highest in six months (medium):
Politics
Domestic
International War Against Radical
Islam
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for Survival’s website (http://investingforsurvival.com/home)
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