The Morning Call
8/1/17
The
Market
Technical
The indices
(DJIA 21891, S&P 2470) had another mixed day (Dow up, S&P down). Volume rose; breadth improved. 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.
And (short):
The VIX (10.3) was
up another 2 %. It finished above the
former lower boundaries of both the intermediate and long term trading ranges
for the third day. To be sure, enough
time has lapsed to confirm the break of both trends to the downside. That said, given that we are talking about
the VIX hitting an all-time low, there is the question of whether the last week’s
decline was some kind of blow off bottom.
Follow through.
The long
Treasury rose, but remained below the lower boundary of its very short term
uptrend. However, it is still 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. If TLT starts breaking those support levels,
it would probably be a sign that the underlying psychology of bond investors is
changing.
The dollar plunged
below the lower boundary of its short term trading range for a second day; if
it remains there through the close today, it will reset to a downtrend. This is an ugly chart.
GLD continues to rise, ending 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 continue their schizophrenic behavior (Dow up, S&P and NASDAQ down). At the same time, TLT, UUP and GLD investors
seemed to have reembrace the weak economy, low inflation/interest scenario. I would think that this deviant pin action
would create a little heartburn for equity investors but that has not been case
so far.
Fundamental
Headlines
Yesterday’s
US economic data was positive overall: June pending home sales and the July
Dallas Fed manufacturing index were well above estimates while the July Chicago
PMI was below.
Overseas, the
July Chinese manufacturing and services PMI’s were below estimate---this after
two weeks of relatively upbeat economic stats.
As you may recall, I had speculated the improving Chinese data might
portend it being removed from the global ‘muddle through’ scenario. It still might; but clearly, these numbers
don’t support such a move.
***overnight,
the July Chinese Caixin manufacturing PMI (different from the stat above) was
better than expected; the July EU and UK manufacturing PMI’s were above
forecasts.
Bottom line: with
the house on summer break, the fiscal news flow will likely slowdown for the
next month. However, the White House
remains in turmoil which keeps signs of instability in the headlines. Plus, we are still in earnings season. So we could see a lot more action in August
than is normal. Reinforcing that is the
current inconsistent pin action among the equity indices and indicators of
other major segments of the securities markets.
In this
uncertain atmosphere, I would be scaling out of my winners and all my losers. Sell high, buy low.
More
on valuation (short):
My
thought for the day: too many of us strive for immediate gratification at the
expense of our future prosperity. I
would argue the government has been operating on that mindset for far too
long---as evidenced by the growing level of national debt and the budget
deficit. Unfortunately, those debts
ultimately have to be paid back; and the larger they are, the more painful and
difficult the repayment process.
Investing for Survival
Recognizing
losses.
News on Stocks in Our Portfolios
Revenue of $5.08B (+12.1% Y/Y)
Economics
This Week’s Data
The
July Chicago PMI was reported at 58.9 versus expectations of 61.0.
June
pending home sales rose 1.5% versus estimates of up 0.9%.
The
July Dallas Fed manufacturing index came in at 16.8 versus forecasts of 13.8.
Month to date retail
chain store sales grew faster than in the prior week.
June
personal income was flat versus projections of +0.4%; personal spending rose
0.1%, in line.
Other
More
on auto loans (medium):
The
threat to oil (medium):
What
to expect out of Draghi (medium):
More
on the Fed’s mistaken reliance on the Phillips Curve (short):
Politics
Domestic
Great piece on
fixing healthcare (medium):
International
Germany
reacts to US sanctions of Russia (medium):
Stockman on the war in Syria
(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