The Morning Call
10/6/17
The
Market
Technical
The indices
(DJIA 22775, S&P 2552) continued their relentless advance, yesterday not so
slow. Volume was up marginally; breadth continued
to strengthen. Both remain above their
100 and 200 day moving averages and are in uptrends across all time
frames.
And:
The VIX (9.2) was
down 4 ½ %, ending its string of positive performances on up Market days. 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 seventh day; but it is
still above its July low.
The long
Treasury declined, but finished 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)
and is developing a very short term downtrend.
The dollar rose,
but remained in its short term downtrend and below its 100 and 200 day moving
averages. It is developing a very short
term uptrend.
GLD fell, trading
below its 100 moving average (now support; if it remains there through the
close next Monday, it will revert to resistance), above its 200 day moving
averages (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.
The nonstock indices
traded in line stocks yesterday---everybody getting jiggy about tax reform.
I remain
uncomfortable with the overall technical picture.
Fundamental
Headlines
The
US economic dataflow continues its winning way.
Yesterday, the August trade deficit was lower than expected, as were
weekly jobless claims while factory orders (primary indicator) were above
consensus.
Overseas,
US and South Korean trade representatives announced that they would amend the
trade pact between the two countries.
While we don’t know the specific terms, given Trump’s drive for more ‘fair’
trade, I am going to assume that the net effect of any changes will be a plus
for the US.
***overnight,
August German industrial orders were better than anticipated; the Japanese
trade minister arrived in Washington for second round of talks; Hurricane Nate
takes aim at Gulf states.
The
biggest news of the day was the house passed its version of the FY2018 budget;
while the senate version was voted out of committee. I am not sure of the timing of a full senate
vote, but clearly the senate is a step closer.
A couple of
observations:
(1)
this is a solid step towards tax reform,
(2)
that said, Ryan is already scaling back some of the
provisions of tax reform,
(3)
plus, given the painfully slow sausage making
legislative process, congress is going to have to move at rapid [for it] pace in
order to pass tax reform in 2017.
Bottom line:
with more good economic numbers and actual action by the ruling class, it is
not surprising that investors were in a good mood yesterday. That said, I am sticking with my opinion that
it is way too soon to (1) be forecasting an economic liftoff after a single week’s
upbeat numbers and (2) assume [a] tax reform is around the corner and [b] even
if it is, that it will be a big plus for the economy. As I have opined previously, a non-revenue
neutral tax bill will be a negative; and if it is revenue neutral, it is
unlikely to be as stimulative as is currently being hoped.
Don’t
try to predict the next recession (medium):
This
time isn’t different (medium):
Investing for Survival
The
lure of excitement kills returns.
News on Stocks in Our Portfolios
Economics
This Week’s Data
August
factory orders were up 1.2% versus expectations of up 1.0%.
The
September employment report showed a 33,000 decline versus projections of a
100,000 increase.
Other
Update
on money supply (medium):
ECB
policy meeting scheduled for next week (short):
America’s
most bankrupt cities (short):
Politics
Domestic
International War Against Radical
Islam
Increasingly
likely that Trump will decertify Iran nuclear deal (medium):
The constitutional crisis in
Catalonia worsens (medium):
Russia increases economic support for
North 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