The Morning Call
10/3/17
The
Market
Technical
The indices
(DJIA 22557, S&P 2529) had another good day. Volume was flat and 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
down fractionally (a bit unusual 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 declined, but still 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).
The dollar rose,
but remained in its short term downtrend and below its 100 and 200 day moving
averages. However, it has negated its
very short term downtrend.
GLD fell, 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 two Monday’s ago still need to be
closed.
The nonstock indices
continued to move counter to their recent trends---all suggesting an improving
economy and higher interest rates.
I remain
uncomfortable with the overall technical picture.
Fundamental
Headlines
Yesterday’s
economic stats both here and abroad were very upbeat. In the US, the September Markit PMI and the
ISM manufacturing index were both much better than expected while August
construction spending was also strong though the July reading was revised down
significantly.
Overseas,
the August EU unemployment rate remained near a low while the September UK
manufacturing PMI was below expectation; both the September Chinese Markit PMI
and the Japanese large manufacturing index were near record highs.
***overnight,
September EU PPI was hotter than anticipated; September UK construction PMI was
below expectations.
Bottom
line: if we could get a month or so of
the above results, it would mean that revisions in our economic forecast could
be in order---depending on how tax reform impacts the national debt/budget
deficit and what the Fed actually does with respect to unwinding QE. That said, this is one day worth of
data. Hardly a trend. Follow through.
Mean
reversion of the CAPE ratio (medium):
https://www.bloomberg.com/view/articles/2017-10-02/what-if-high-stock-values-revert-to-normal-levels
An
interview with Howard Marks (medium and today’s must read):
The
latest from BankAmerica (medium):
My thought for the day: smart money is slow money. If a stockbroker or
financial planner tells you that you’ll miss a huge opportunity if you don’t
buy right now, ignore them. Before
buying any stock or any financial product, you should do your research so that you
understand it. A key aspect of that
research is to have a good handle on the risks.
The cold hard fact is that you are going to be wrong on a certain
percent of your investments. So take
your time, do your research and be sure you understand the risks. One of the best ways to make money is to avoid
losing it.
Investing for Survival
How
much you need to save for retirement (medium):
http://politicalcalculations.blogspot.com/2017/09/how-much-do-you-need-to-save-for.html#.WcQb_siGM2w
News on Stocks in Our Portfolios
Economics
This Week’s Data
The
September Markit PMI came in at 53.1 versus expectations of 53.0.
The
September ISM manufacturing index was reported at 60.8 versus estimates of
58.0.
August
construction spending rose 0.5% versus forecasts of up 0.3%; however, the July
reading was revised from -0.6% to -1.2%.
Other
Fed
eyeing rate hikes as an asset pricing tool (medium):
QE only made the rich,
richer (medium):
Mall
vacancy rates increase in third quarter (medium):
Politics
Domestic
International War Against Radical
Islam
Iran
deploys tank on the border with Iraqi Kurdistan (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