The Morning Call
11/9/17
The
Market
Technical
After starting
out in the red for a second day in a row, the indices (DJIA 23563, S&P 2594)
closed slightly higher (the relentless drive higher). Volume was down (seven out of the last eight
days); breadth was mixed. Both remain
above their 100 and 200 day moving averages and are in uptrends across all time
frames.
The VIX (9.8) fell
1 ½%---finishing below the upper boundary of its short term downtrend, below
100 day moving average (now resistance), below its 200 day moving average (now
resistance) and back below the lower boundary of its long term trading range, re-starting
the clock on that challenge (if it remains there through the close next
Tuesday, it will reset to a trading range). While it is still on the verge of a
directional change, the July low 8.8 remains the bottom.
The long
Treasury was down, ending above its 100 and 200 day moving averages (now support)
and above the lower boundaries of its short term trading range and long term
uptrend. It is now building a very short term uptrend.
And
(medium):
The dollar declined,
ending below its 200 day moving average (now resistance), right on the upper
boundary of its short term downtrend (once again stopping the clock on any the
timetable for a reset to a trading range), above its 100 day moving average
(now support) and continues to develop a very short term uptrend.
GLD rose, back
above its 100 day moving average (re-starting the timetable for a reversion to
support; if it remains there through the close today, it will reset), above its
200 day moving average (support) and the lower boundary of a short term
uptrend. Again, potential trend change.
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 were again out of sync with themselves, the VIX and stocks, but
seem to be pointing at a change in trends---in different directions. As you can deduce from my recent links, the
most concerning divergence is in the bond market. Its rise suggest a weaker economy or a safety
trade, neither of which is a plus for stocks.
I remain
uncomfortable with the overall technical picture.
Fundamental
Headlines
It
was another very quiet day. Only one
domestic economic release: weekly mortgage applications were flat while
purchase applications rose slightly. Overseas,
the October Chinese trade figures, while lower, were in line.
Most
of the day’s media focused on light repartee reviewing Trump’s first year in
office---a sure sign that there was a dearth of news flow.
Nonetheless,
there was a couple of items worth mentioning:
(1)
the senate is still scheduled to release its version of
the tax bill today; though yesterday, rumors were for another delay. In any case, it will not reflect the house
version---which has its own problems. Late
in the day, the CBO scored the house version of the tax bill cost as $1.7
trillion [versus the proposed budget’s scoring of $1.5 trillion]. Cue the discussion of how growth will make up
the difference.
(2)
the Saudi plot thickens. The number [of assets confiscated] keeps
getting bigger (medium):
Bottom
line: yesterday was a real snoozer.
Nothing to add.
October
dividend review (short):
My
thought for the day: the most powerful way to grow
your money is learning to live with less, since you have complete control over
it.
Investing for Survival
Seeking
and avoiding risk at exactly the wrong time.
News on Stocks in Our Portfolios
Economics
This Week’s Data
Weekly
jobless claims rose by 10,000, ahead of estimates of 3,000.
Other
Goldman:
how the Fed broke the Market (medium):
More
on the Paradise Papers (medium):
A
pension bailout bill is likely to be introduced soon (medium):
Draghi’s
problem with Italy (medium):
Politics
Domestic
International War Against Radical
Islam
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for Survival’s website (http://investingforsurvival.com/home)
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