The Morning Call
11/17/17
The
Market
Technical
Yesterday, the
indices (DJIA 23458, S&P 2585) seemingly put their poor pin action of the
last week in the rear view mirror. Some
follow through will cement that call.
Volume was flat and breadth improved.
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---and with
the assumption is that stock prices are going higher.
The VIX (11.7)
was down 1%, but still finished above the upper boundary of its former short
term downtrend (now a trading range), above its 100 day moving average (now
support), above its 200 day moving average (now support) and above the lower
boundary of its long term trading range.
I was a little surprised that the VIX wasn’t down more and that fits
with my observation yesterday that volatility may just be returning to normal
after an unusually placid period. Still
follow through.
The long
Treasury was down but remained above its 100 day moving average for a second
day (now resistance; if it remains there through the close today, it will
revert back to support), above its 200 day moving average (now support) and
above the lower boundaries of its short term trading range and long term
uptrend.
The dollar rose,
ending below its 200 day moving average (now resistance), below the upper
boundary of its short term downtrend, but above its 100 day moving average (now
support). It appears that UUP is
confirming its downtrend---which suggests economic weakness or flight from the
dollar.
GLD was down,
closing below its 100 day moving average for a second day (however, since GLD
has violated this moving average five times in the last week, it is not clear
at this point whether it is serving as resistance or support), above its 200
day moving average (support) and the lower boundary of a short term
uptrend.
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 technical assumption has to be that stocks are going higher.
Trading in UUP,
GLD and TLT remain out of sync with themselves, the VIX and stocks, and seem to
be pointing at a change in trends---but in different directions. I am watching for more follow through in all.
I remain
uncomfortable with the overall technical picture.
Fundamental
Headlines
The
economic data releases yesterday were weighed to the plus side: the November
Philly Fed index and weekly jobless claims were disappointing but October
industrial production, the November housing index and October import/export
prices were ahead of estimates. Nothing
overseas.
***overnight,
in a speech Draghi before the European Banking Congress confirmed what the
numbers have been telling us, i.e. that the EU economy is improving. (medium):
And
now this from the morons at the Fed (medium):
The
big news of the day was the house’s passage of its version of tax reform. Clearly, that is a step toward achieving a
tax bill. Plus the senate is scheduled
to pass its version today. Then the
tough reconciliation process begins. However,
this is a step forward. On the other
hand, the more important issue is just how positive the final product, assuming
that there is one, will be for individual taxpayers, corporate investment and
economic growth.
Here
is what is in the house tax reform bill (medium):
This
is the best that the Weekly Standard can do in praising the current tax reform
(medium):
Not
much evidence that a corporate tax cut will boost wages (medium):
Bottom
line: tax reform, if passed in its current form, is not a negative. Indeed, it may be a mild positive. However, it is not simpler, fairer or
pro-growth and hence is not going to achieve the stated objectives of the GOP. It will allow republicans to claim that they
delivered on a campaign promise. That
might help them in the 2018 elections but when taxpayers realize that they have
been duped, it could work against them.
Expected 2017
corporate profits (short):
Investing for Survival
Ten
financial principles.
News on Stocks in Our Portfolios
Brown-Forman (NYSE:BF.B)
declares $0.1975/share quarterly dividend, 8.2% increase from prior
dividend of $0.1825.
Nike (NYSE:NKE)
declares $0.20/share quarterly dividend, 11.1% increase from prior dividend of
$0.18.
Economics
This Week’s Data
The
November Philadelphia Fed manufacturing index was reported at 22.7 versus
expectations of 25.0.
October
industrial production rose 0.9% versus estimates of up 0.4%; capacity
utilization came in at 77.0 versus forecasts of 76.3.
The
November housing index was reported at 70.0 versus consensus of 67.0.
October housing
starts increased 13.6% versus projections of a 5.5% advance.
Other
Update
on big four economic indicators (medium):
Politics
Domestic
International War Against Radical
Islam
Latest
from Saudi Arabia. It’s the money stupid.
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