The Morning Call
8/3/17
The
Market
Technical
The indices
(DJIA 22016, S&P 2477) moved higher yesterday with investors breathlessly
on the edge of their seats awaiting a Dow close above 22000---which happened;
though the S&P was barely to the upside.
Volume was flat. Breadth was
strong but is entering overbought territory.
The upward momentum as defined by their 100 and 200 day moving averages
and uptrends across all timeframes remains intact. At the moment, technically speaking, I see little,
except for the VIX, to inhibit the Averages’ challenge of the upper boundaries
of their long term uptrends---now circa 24198/2763.
The VIX (10.2) rose
2 %. It finished back above the former
lower boundary of the intermediate term trading range as well as above the
former lower boundary of its long term trading range. As you know, I reset these trends to down but
raised the question as to whether the VIX had made some kind of bottom. I think that it remains a debatable point as
the VIX continues to vacillate above and below those former trading range
boundaries.
The long
Treasury rose, ending above its 100 and 200 day moving averages (both support),
the lower boundaries of its short term trading range and its long term
uptrend. That is a lot of support. So unless TLT starts breaking those support
levels, I am assuming that last week’s soft price performance is not something
about which to be concerned.
The dollar fell
again, closing in a short term downtrend and below its 100 and 200 day moving
averages.
GLD rested yesterday, but finished above its
100 and 200 day moving averages (both support) and the lower boundary of a new
developing very short term uptrend.
Bottom line: the
indices were both up yesterday, though the S&P barely got above the flat
line. So they remain somewhat out of
sync with themselves as well as TLT, UUP and GLD. It seems especially odd to me that investors
would be getting jiggy about US companies’ future earnings but be pessimistic
about the currency that they are valued in. The overall pin action among the
different Markets has me puzzled.
Fundamental
Headlines
Yesterday’s
US economic data was mixed, again: weekly mortgage and purchase applications
were down while the July ADP private payrolls number was above estimates. Nothing overseas.
***overnight,
the Bank of England left monetary policy unchanged and lowered its forecast for
2017 and 2018 GDP growth.
Plus the July Chinese
Caixin services PMI declined from its June reading.
The
news out of Washington was mostly trade related:
(1)
Trump signed Russian sanctions legislation and Russia
reacted. I believe this is a mistake not
only because of its hypocrisy over election interference [like the US hasn’t
and doesn’t] and Ukraine [where the CIA started the whole thing by instigating
a coup against its elected pro Russian leader] but because we have enough foreign
problems without getting in a pissing contest with a major rival. Of course, the dems had Trump in a corner on
this issue [i.e. his own Russia gate problem], so he had little political
wiggle room. Still, I am not sure anything
good will come of this. (medium):
(2)
on the other hand, Trump announced that he was
considering measures to penalize China for theft of US intellectual
property. This has been my biggest pet
peeve in our trade policy with the Chinese; so I think it the right thing to
do. The question is, how sternly will
the Chinese react, especially in front of their upcoming Party Congress.
Winners and losers in a trade war with China (medium):
China has enough internal worries without getting in a
major trade dispute with the US.
Bottom line: the Dow was
really the story yesterday, as it swung above and below the 22000 mark. That it was successful will likely give
investors a boost to their euphoria---like they really need one. In any case, it is one more hurdle overcome
on the Averages way to the upper boundaries of their long term uptrends.
That
said, I reiterate my growing concern over Trump’s belligerent foreign
policy. In my opinion, nothing good can
come of threatening and butting heads with the North Koreans or taking a holier
than thou approach to Russia.
Dividend stats
for July (short):
Update
on valuations.
And
this (short):
Following
a pretty good second quarter earnings season, analysts don’t seem more
optimistic about the future (short):
My
thought for the day: one more quote from Warren Buffett: Don't do
anything in life where, if somebody asks you the reason why you are doing it,
the answer is “Everybody else is doing it.” I mean, if you cancel that as a
rationale for doing an activity in life, you'll live a better life whether it's
in the stock market or any place else.
Investing for Survival
If
the stock market can make you rich, how come there are so many poor Americans?
News on Stocks in Our Portfolios
Revenue of $3.04B (-5.0% Y/Y) misses by $20M.
Economics
This Week’s Data
Weekly
jobless claims fell 5,000 versus forecasts of being flat.
Other
Politics
Domestic
Seymour Hirsch
on Russia-gate (medium and a must read):
International War Against Radical
Islam
Gulf States dispute with Qatar back
to square one (medium):
European cities absorb sharia law
(medium):
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for Survival’s website (http://investingforsurvival.com/home)
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