The Morning Call
8/25/17
The
Market
Technical
The indices
(DJIA 21783, S&P 2438) drifted lower yesterday. Volume was flat; breadth was weaker. The S&P closed right on the lower boundary
of its short term uptrend for a second time in the last five trading days, remained
above its 100 and 200 day moving averages and continued to develop a very short
term downtrend.
The VIX (12.2) declined
fractionally, finishing below the upper boundary of its short term downtrend
but above its 100 and 200 day moving averages.
I continue to believe that the questions remain as to whether the VIX made
or is making some kind of bottom extending back to late July and if I was
premature resetting the intermediate term from trading range to downtrend.
The long
Treasury fell, but ended above its 100 and 200 day moving averages (both
support), the lower boundaries of its short term trading range and its long
term uptrend and has now made a third short term higher high. That is a lot of support.
The dollar advanced,
but closed in a short term downtrend and below its 100 and 200 day moving averages.
GLD was down, but finished above the lower
boundary of its very short term uptrend and its 100 and 200 day moving averages
(both support). Plus it is very close to
the upper boundary of its short trading range.
Bottom line: the
Averages failed for a second day to build on Tuesday’s explosive move to the
upside. In the process, the S&P once
again closed right on the lower boundary of its short term uptrend. To be fair, stock prices had to fight a discouraging
news flow (possible government shutdown/default); though that reaction itself
is something new---which is to say that bad news was actually bad news. Plus many investors were likely on the
sidelines waiting today’s Yellen and Draghi Jackson Hole speeches. From a technical standpoint, the key issue is
whether or not the S&P holds or challenges its short term uptrend.
The TLT, UUP and
GLD also reflected concerns about a government default.
Fundamental
Headlines
Yesterday’s
economic data was mixed: weekly jobless claims were slightly disappointing, the
August Kansas City Fed’s manufacturing index was improved and July existing
home sales were well below projections.
Overseas,
the stats were also mixed: UK second quarter GDP rose, though household
spending was the weakest in three years.
***overnight,
August German business sentiment remained high but eased slightly.
Trump
kept DC is a stir, attacking McConnell and Ryan for lack of progress on fiscal
policy after threatening to shut down the government if congress didn’t fund
the southern wall. I have already opined
that the Donald is following his own script right out of ‘The Art of the Deal’;
so I don’t think this situation is as dire as the rhetoric. That said, while the odds of a shutdown may
be low, were to it to occur, the Market consequences would be unsettling.
A history of US
government shutdowns since 1976 (medium):
***overnight,
Gary Cohn vowed that between now and the end of the year, Trump’s focus will be
on tax reform. Hopeful news as long as
he stays on message. How likely does
that seem?
In
addition, many investors were sitting on their hands awaiting today’s speeches
by Yellen and Draghi. As you know, my
expectations are for a lot of mealy mouth platitudes, the bottom line of which
is dovish. As you also know, I think
this strategy just delays the inevitable and the longer it delays the more
intense the ultimate pain.
Has
the Fed completely lost control? (medium):
Bottom line: ‘the economic news is not nearly as positive
as the ruling class would have you believe.
The central bankers are threatening to tighten monetary policy, which I doubt. But we will know more by the close Friday (today). So
far, the only thing that the GOP dominated congress can pass is gas. Trump continues to persist in making the
achievement of his own agenda more difficult by insulting and threatening the
very people he needs to accomplish it.
Of course, this could all end, despite the drama. It better because that is the way stocks are
priced.’
S&P
second quarter earnings (short):
My
thought for the day from Charlie Munger: ‘I don’t think
you can get to be a really good investor over a broad range without doing a
massive amount of reading.’
Investing for Survival
Seven
strategies for investing at market peaks.
News on Stocks in Our Portfolios
Economics
This Week’s Data
July
existing home sales fell 1.3% versus consensus of up 0.7%.
The
August Kansas City Fed manufacturing index came in at 16 versus July’s reading
of 10.
July durable goods orders
fell 6.8% versus estimates of down 5.8%; that was largely a function of
declining transportation orders---ex transportation orders were up 0.5% versus
forecasts of up 0.4%. However, core
capital goods were up 0.4% versus expectations of up 0.5%.
Other
Business
loan growth continues to slide (medium):
A
different look at economic growth (medium):
What
financial indicators say about the economy (medium):
Politics
Domestic
How the money
gets spent in Afghanistan (medium):
New study on
climate change (medium):
International
Russia
deploys nuclear capable bombers near South Korea (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