The Morning Call
12/12/17
The
Market
Technical
The
indices (DJIA 24386, S&P 2659) had a good day, though volume was flat and
breadth was mixed. 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 (9.3) fell
2 ½ %, closing below the lower boundary of its long term trading range for a
second day, below its 100 and 200 day moving averages (both resistance). It is again nearing its July low (8.8)
The long
Treasury was down fractionally, ending above its 100 and 200 day moving
averages and the lower boundaries of a very short term uptrend, its short term
trading range and long term uptrend. So
bond investors still don’t appear to be concerned about a Fed rate hike later
this week.
The dollar was
unchanged, above its 100 day moving average (now support), right on the upper
boundary of a very short term downtrend but below its 200 day moving average
(now resistance).
Gold
was down ½ %, continuing its poor performance.
It is below its 100 and 200 day moving averages and reset its short term
trend from up to a trading range. GLD
investors are apparently more concerned about a rate rise than the bond guys.
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. 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.
Fundamental
Headlines
Yesterday
was quiet on most fronts: no economic data in the US or abroad. Investors spent the day (1) getting jiggy
with bitcoin, (2) anticipating a grand exit by Yellen on Wednesday and (3)
ignoring more accusations of sexual harassment by Trump. No wonder stocks were up.
I
have linked below to a number of articles on relevant issues: bit coin, Brexit,
a slowdown in volume of containerized shipping.
This
from two big supporters of tax reform (medium):
Bottom
line: animal spirits are high partly as a function of the seasonal bias and
partly in anticipation of upbeat news on tax reform and infrastructure spending. The question is, assuming the successful passage
of both, what will be the impact on corporate earnings and how those earnings
are valued? In my opinion, the most
optimistic investment scenario possible is more than adequately reflected at
current price levels. Be careful.
Investing for Survival
Three
unexpected retirement costs.
News on Stocks in Our Portfolios
Economics
This Week’s Data
The
November small business optimism index came in at 107.5 versus expectations of
104.4.
November
PPI was up 0.4% versus estimates of up 0.3%; ex food and energy, it was up 0.3%
versus forecasts of up 0.2%.
Other
Is
softness in the global containerized shipping market a warning sign? (medium):
The
math of unwinding the Fed’s balance sheet (medium):
Some
analysis of the Brexit ‘break through’ (medium):
China’s
plan to combat US tax reform (medium):
Is
the World Trade Organization worth effective? (medium):
Today’s
bitcoin entries:
Politics
Domestic
International War Against Radical
Islam
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