The Morning Call
11/30/17
The
Market
Technical
The
indices (DJIA 23940, S&P 2626) had another mixed day (Dow up, S&P down,
though not by much). Volume was up and
breadth improved. The bottom line remains
that both of the Averages continue to trade 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.
The VIX (10.7)
was up another 6 ½%, closing above the lower boundary of its long term trading
range, above its 200 day moving average (now resistance; if it remains there
through the close next Monday, it will revert to support) and below its 100 day
moving average (now resistance).
The long
Treasury spiked 1% on heavy volume, ending below the lower boundary of its
newly developing very short term uptrend, right on its 100 day moving average (now
support), above its 200 day moving average (now support) and above the lower
boundaries of its short term trading range and long term uptrend. This is the first crack since late October in
the bond guys’ weak economy, tighter Fed narrative.
The dollar was down
one cent, finishing 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---no crack here.
Gold
was off ½ %, though it remained above its 100 day moving average for the third
day, above its 200 moving average (now support) and in a short term uptrend. GLD moved in sync with TLT.
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 out of sync with themselves (sluggish economy, weak
interest rates) and with the VIX and stocks.
I remain confused and uncomfortable with the overall technical picture.
This
is not normal (short):
Fundamental
Headlines
Yesterday’s
economic data continued its winning way.
Revised third quarter GDP was reported up 3.3% which was in line but an
improvement from the prior reading; corporate profits also came in above its
previous report, October pending home sales were above estimates and while
weekly mortgage applications declined, the more important purchase applications
were up. Overseas, nothing.
***overnight,
the November Chinese manufacturing and non-manufacturing PMI’s were ahead of
estimates; November EU inflation was below.
Yellen
testified before congress for the last time, leaving a body of work that will
surely be quoted often in the future. Her
tenor during the question and answer session did not change materially from
that in her prepared remarks (which I linked to yesterday).
The
Fed released its latest Beige Book. It
was not quite as buoyant in tone as I had expected. Still it pictured progress (medium):
The
senate continues to work to put together a tax proposal that is better
characterized by junk legislation than anything that addresses a simpler,
fairer or economically stimulative reform.
This
comment on the senate bill from a lion in our industry---Jack Vogel (short and
today’s must read):
The
bottom line: I believe that the unwind of the gross mispricing and
misallocation of assets will not end well.
I just don’t know what the trigger event is. The GOP tax circle jerk is worse than nothing
except for its political implications.
In my opinion, it will not lead to economic growth; but it will lead to
higher debt and an additional constraint on the economy; it will lead to more
stock buybacks and increased dividends none of which will create jobs or raise
tax revenues. When the electorate
figures this all out, there will likely be hell by the GOP.
Investing for Survival
Expert
judgment.
News on Stocks in Our Portfolios
Revenue of $644.8M (+16.6% Y/Y) beats by $44.73M.
Economics
This Week’s Data
October
pending home sales rose 3.5% versus expectations of up 1.0%.
Weekly
jobless claims fell 2,000 versus estimates of being flat.
October
personal income rose 0.4% versus forecasts of +0.3%; personal spending was up
0.3%, in line; the PCE price indicator was up 0.2%, also in line.
Other
The
latest from Jeffery Snider (medium):
The
latest on Brexit (medium):
US
rejects China’s ‘market economy; status (medium):
http://www.zerohedge.com/news/2017-11-30/us-fights-chinas-market-economy-status-threatens-future-wto
Politics
Domestic
International
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