The Morning Call
10/4/17
The
Market
Technical
The indices
(DJIA 22641, S&P 2534) continued their slow, steady climb. Volume was down but breadth continued to strengthen. Both remain above their 100 and 200 day
moving averages and are in uptrends across all time frames.
The VIX (9.5) was
up fractionally (a second day of unusually positive performance for a big up
Market day). It ended below the upper
boundary of its short term downtrend, below its 100 and 200 day moving averages,
below the lower boundary of its long term trading range for a fourth day; but
it is still above its July low.
The long
Treasury rose, finishing above its 200 day moving average (support) and the
lower boundaries of its short term trading range and its long term uptrend. However, it is below its 100 day (now resistance).
The dollar fell,
remaining in its short term downtrend and below its 100 and 200 day moving
averages, but is developing a very short term uptrend.
GLD traded up, ending
right on its 100 moving average, above its 200 day moving averages (both
support) and the lower boundary of a short term uptrend. However, it is developing a very short term
downtrend.
Bottom line: long term, the indices remain
strong viz a viz their moving averages and uptrends across all timeframes. Short
term, they are above the resistance level marked by their August highs, meaning
that there is no resistance between current price levels and the upper boundaries
of the Averages long term uptrends.
On the other
hand, all those gap openings from three Monday’s ago still need to be
closed. Despite some minor retreats, the
nonstock indices continue to point to a slower economy, lower interest
rates---seemingly the opposite of the scenario prevalent among the stock boys.
I remain
uncomfortable with the overall technical picture.
Fundamental
Headlines
The
economic data was again upbeat: month to date retail chain store sales grew
fractionally faster than in the prior week and September light vehicle sales
were well above estimates.
Overseas,
the stats were not as positive: September EU PPI was hotter than anticipated;
September UK construction PMI was below expectations.
***overnight,
the September EU composite PMI hit a four month high.
Aside
from the continuing coverage of the Las Vegas tragedy, it was a relatively uneventful
day. The narrative continued to focus on
tax reform and its expected benefits to the economy.
Goldman:
no sign of recession (short):
However, there
remain questions about whether tax reform can get though the legislative
process. For those interested, this is a
deep in the weeds look at tax reform (medium):
Moody’s
threatens to cut US credit rating if tax plan is passed in its current form
(medium):
The
other item worth noting is the rising speculation on who the next Fed chairman
will be and, naturally, his approach to monetary policy.
http://www.zerohedge.com/news/2017-10-03/yields-slide-market-smells-squeeze-powell-fed-chair-chatter
Bottom
line: we seem to be in another one of
those goldilocks atmospheres where there is no bad news, bad news is seemingly
good news or no news and the good news is, well, good news. The economy is assumed to be growing nicely,
tax reform appears assured and everyone believes that the unwind of QE will
cause no disruptions in the Markets.
To which I reply:
the economy may be growing but not as steadily or rapidly as in the past and
there is nothing on the horizon to suggest that will change; including tax
reform, which will have little economic impact if it is revenue neutral and a negative
one if it is not; the Fed has never in its entire history successfully managed
the transition from tight to normal monetary policy, why would anyone invest on
the prospect that it will this time?
The
latest from John Hussman (medium and a must read):
September’s
dividend record (short):
More
on valuation (short):
What
the next crisis will look like (medium):
My
thought for the day: renowned investor, Ned Davis, points to basic traits that
make investors great: they remove emotions from the investing process, instead focusing
on data and their investment discipline; they are open-minded to new ideas or
revisiting prior ones; and they are risk adverse.
Investing for Survival
How
to invest carefully for mom.
News on Stocks in Our Portfolios
Revenue of $816.8M (+4.0% Y/Y) misses by $3.78M.
Revenue of $16.24B (+1.3% Y/Y) misses by $70M.
Economics
This Week’s Data
Month
to date retail chain store sales grew slightly more than in the prior week.
September
light vehicle came in at 18.6 million units versus expectations of 16.7 million
units.
Weekly
mortgage applications fell 0.4% while purchase applications rose 1.0%.
The
September ADP private payrolls report showed job a 135,000 increase in jobs
versus forecasts of a rise of 140,000.
Other
Shale
production may not be as strong as many suggest (medium):
Politics
Domestic
The tragic
incoherence of NFL protests (medium):
International War Against Radical
Islam
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