The Morning Call
9/6/17
The
Market
Technical
The indices
(DJIA 21753, S&P 2457) took it in the chops yesterday on higher volume and
weaker breadth. Nevertheless both remain
above their 100 and 200 day moving averages and are in uptrends across all time
frames---including the S&P which ended above the lower boundary of its
short term uptrend. But both are still
below the resistance offered by their former all-time highs.
The VIX (12.2) soared
22%, leaving it below the upper boundary of its short term downtrend, but back
above its 100 day moving average (it reverted to resistance on Friday which is
now up to question), its 200 day moving average (negating last Wednesday’s
break) and the lower boundary of a developing very short term uptrend. The
question as to whether or not the VIX has bottomed clearly remains open.
The long
Treasury rose 1 ½ % on volume, finishing above its 100 and 200 day moving
averages (both support), the lower boundaries of its short term trading range
and its long term uptrend, above the resistance level marked by its August high
and has now made a third short term higher high.
The dollar fell,
closing in a short term downtrend and below its 100 and 200 day moving averages,
in a series of six lower highs and below the lower boundary of its short term
trading range (if it remains there through the end of trading on Thursday, it
will reset to a downtrend.
GLD had another good day, ending above the
lower boundaries of its short term and very short term uptrends and above its
100 and 200 day moving averages (both support).
Bottom line: investors
apparently haven’t decided whether bad news is good news as stocks reversed
last week’s rise. I am watching the
indices’ August highs on the upside and the lower boundaries of their short
term uptrends on the downside.
On the other
hand, the unambiguous performances of TLT, GLD and UUP continue to point at a
weakening economy. I continue to be
uncomfortable with the overall technical picture.
Fundamental
Headlines
Only
one US datapoint released yesterday: July factory orders were slightly worse
than expected. As an aside, there will
be very few US stats reported this week.
So the news flow this week will be dominated by other factors,
including:
(1)
weather: following Harvey’s destruction, Irma is now a
category five hurricane and headed toward Florida. Plus, there appears to be yet another
hurricane [Jose] forming in the eastern Atlantic---thus increasing the odds of
more economic growth opportunities [just kidding],
(2)
more central bank bulls**t: the latest Beige Book will
be released this afternoon. I continue
to believe that this hurricane season will provide all the cover the Fed needs
to avoid any further tightening moves. Confirming
that judgment, two FOMC members mad very dovish speeches yesterday.
In addition, the ECB meets on Thursday. At the moment, investors are concerned about
the ECB’s hesitancy to provide any details about the unwinding of its bond
buying program. I assume that this means
that if the Fed doesn’t tighten, neither will it [any tightening absence the
Fed following suit would likely result in an even stronger euro {weaker dollar}
which is a major trade issue],
(3)
more political bulls**t: congress is back to entertain
us. Tax reform, the debt ceiling, hurricane
relief and now DACA are on their agenda.
Good luck.
In a related matter, the most recent round of NAFTA
negotiations ended with no result. That
is not unexpected. Trade treaties are
historically very difficult on which to reach agreement. The point being to not get too hopeful near
term.
(4)
North Korea: I remember playing ‘chicken’ on the
playground when I was in junior high; the game being two players stand facing
each other with the feet as far apart as possible. Then each player takes a turn sticking a
knife between the feet of his opponent who then has to move one foot to the
knife’s location. This goes on as the
players feet get closer and closer together until one player ‘chickens out’ or
gets stuck with a knife. It clearly
wasn’t the smartest thing I ever did.
Overseas,
the August Chinese Caixin services PMI as well as the August EU services PMI
came in better than anticipated; so the EU economy continues to be strongest
among the major global participants.
***overnight,
August German factory orders declined 0.7% versus forecasts of +0.2%.
Bottom line: OK,
so investors are not back in the ‘everything is awesome’ mindset---at least not
entirely. That said, one day’s lousy pin
action means nothing in the scheme of things. On the other hand, there a lot of
factors that could weigh heavily on the Market; but only if investors allow
it. About all one can really say is that since
early August investors are uneasy/uncomfortable/uncertain. That’s short term. Long term, the indices remain above their
moving averages and within uptrends across all timeframes. Until they move decisively below those
support levels, the trend is up.
My
thought for the day: manage you liabilities as intelligently as your
assets. Picking the right investments,
seeing them appreciate over time, getting lucky with a big hit from time to
time; that’s fun. Saving more,
optimizing insurance policies and estate plans is boring. But it is your whole balance sheet that
compounds over time, not just half of it.
Investing for Survival
25
of the best Buffett quotes.
News on Stocks in Our Portfolios
Economics
This Week’s Data
July
factory orders fell 3.3% versus expectations of down 3.2%.
Weekly
mortgage applications rose 3.3% while purchase applications were up 1.0%.
The
July trade deficit was $43.7 billion versus estimates of $44.6 billion.
Other
The benefits of
a corporate tax cut (medium):
/
Politics
Domestic
Quote of the day
(short):
International War Against Radical
Islam
Just
so you know (short):
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