The Morning Call
11/29/17
The
Market
Technical
The indices
(DJIA 23836, S&P 2627) had a spectacular day, keeping the relentless move
higher intact. Volume was up: breadth again
improved but again not to the extent that I would have thought given the pin
action. Nonetheless, the bottom line is
that both of the Averages remain above their 100 and 200 day moving averages
and are in uptrends across all time frames---with the assumption being that
stock prices are going higher.
Update
on NYSE outstanding margin debt (medium):
https://www.advisorperspectives.com/dshort/updates/2017/11/28/a-look-at-nyse-margin-debt-and-the-market
https://www.advisorperspectives.com/dshort/updates/2017/11/28/a-look-at-nyse-margin-debt-and-the-market
The VIX (10.0)
was up 1 ½%, closing above the lower boundary of its long term trading range, voiding
last week’s challenge. However, it
finished below its 100 day moving average (now resistance) and its 200 day
moving average (now resistance).
The long
Treasury rose, ending above its 100 day moving average (now support), above its
200 day moving average (now support) and above the lower boundaries of its very
short term uptrend, short term trading range and long term uptrend. It continues to trade as if the economy is
weak and/or the Fed is not raising rates,
The dollar was
up ½ %, but still ended below its 100 and 200 day moving averages (now
resistance) and solidly within a short term downtrend and within a developing
very short term downtrend---not reflective of economic strength or confidence
in the US.
Gold
was off two cents, closing for above its 100 day moving average for the third
day---so maybe it continues to break the gravitational hold of that MA. I am still going to wait a couple of days
before making that call. It remained
above its 200 moving average (now support) and in a short term uptrend. Again not indicative of economic strength or
higher rates.
***overnight,
Bottom line: hasn’t
changed---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 technical assumption has to be that stocks are going higher. If you own enough cash to sleep at night, lay
back and enjoy it.
Trading in UUP,
GLD and TLT are back in sync with themselves (sluggish economy, weak interest
rates) but out of kilter with the VIX and stocks. I remain confused and uncomfortable with the
overall technical picture.
Fundamental
Headlines
Yesterday’s
economic stats were upbeat: month to date retail chain store sales, November
consumer confidence and the November Richmond Fed manufacturing index were all
strong. The only spoiler was the
September Case Shiller home price index which rose slightly but August was
revised down. Nothing overseas.
The
three news items of the day:
(1)
Powell’s testimony before the senate banking committee,
which, in tone, was a bit more dovish than his prepared remarks or anything that
Yellen has said lately,
Today, Yellen
takes victory lap before congress; we will be quoting this testimony one day as
another example of how out of touch with reality the Fed is (medium);
(2)
the Senate budget committee passed its version of tax
reform (medium):
Related (medium):
David Stockman’s thoughts on the
current version (medium):
(3)
North Korea fired another missile into the Sea of Japan
(medium):
Bottom
line: clearly investors were focused on the first two events---which is not unexpected
in this ‘everything is awesome market’.
As I noted above, if you have built cash reserves, there is nothing else
to do but wait. How long? I have already proven I don’t have the answer
to that.
Investing for Survival
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News on Stocks in Our Portfolios
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Economics
This Week’s Data
The
September Case Shiller home price index rose 0.5% versus expectations of 0.4%;
however, the August number was revised down by an equal amount.
Month
to date retail chain store sales grew faster than in the prior week.
November
consumer confidence came in at 129.5 versus estimates of 124.5.
November
Richmond Fed manufacturing index was reported at 30.0 versus forecasts of 15.0.
Weekly mortgage
applications fell 3.1%; however, purchase applications were up 2.0%
Revised third quarter GDP
showed growth of 3.3% in line with expectations; corporate profits rose 10.0%
versus the prior reading of 7.4%.
Other
More
economic stats from John Mauldin (medium):
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