The Morning Call
2/12/18
The
Market
Technical
At
least I have something to talk about for the first time in almost a year. Friday, the S&P bounced off its 200 day
moving average and ended above Thursday’s lower low; that is the good news. However, it failed to recover above its 100
day moving average and has resistance from the upper boundary of a newly
developed very short term downtrend; that is the bad news. At the moment, there is really nothing to do
but watch how the current bout of downside volatility works itself out. However, the bottom line hasn’t changed: very
short term the trend is down; long term, there is hardly a reason to question
the uptrend.
The
long Treasury (117) continues to decline.
TLT has resistance from both moving averages and the short term
trend. The only support left is the
lower boundary of its long term uptrend; and that is less than one point away. If successfully challenged, it will negate a multi
decade’s long uptrend and set up trading range with a lower boundary of 90.
The
dollar is trying to rally as interest rates rise; however, to date, it has been
a meek effort on falling volume. Not
exactly encouraging if you are a dollar bull.
GLD
got hit like other asset classes last week.
Relatively, it did OK and remained above its moving averages, in a short
term uptrend and seems to be trying to stabilize. However, it is nearing the lower boundary of
that short term uptrend, a breach of which could be critical.
I
don’t know how to construct a reasonable analysis of a chart like this. The VIX seems to have found a new, much higher
level at which to trade. But it has only
been there for a short time. So time
(follow through) is going to tell us if it will hold. But at this moment, the VIX is suggesting
that, at the very least, we are in store for a lot more volatility with a
better than even chance it will be to the downside.
Fundamental
Headlines
The
January dividend stats (short):
The
Donald will release his FY2019 budget today, dropping all pretense of a
balanced budget (medium):
News on Stocks in Our Portfolios
General Dynamics
(NYSE:GD) has agreed to acquire all outstanding shares of CSRA for $40.75 in
cash, valuing the transaction at $9.6B, including debt.
The deal is expected to be accretive to General Dynamics'
GAAP earnings per share and to free cash flow per share in 2019, as well as
generate an estimated annual pre-tax cost savings of approximately 2% of the
combined company's revenue by 2020.
Economics
This Week’s Data
US
International
Other
Rig
count soars as oil plummets (short):
What
I am reading today
The problem with emotions
(medium):
Dealing with historically abnormal
markets (short):
$20 billion hidden in the swamp
(medium):
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