The Morning Call
6/7/18
The
Market
Technical
The Averages
(DJIA 25146, S&P 2772) had a banner day though volume was flat. Breadth was positive. The Dow finished above its 100 day moving
average (now resistance; if it remains there through the close on Friday, it
will revert to support). The S&P
ended above its 100 day moving average (now support). Both remained above their 200 day moving
averages (now support). The Dow is in a
short term trading range, the S&P in a short term uptrend.
The resistance
from the 100 day moving average seems about to give way with the Dow ending about its MA and the S&P pushing
out of the trading range that developed around its MA. Assuming follow through, the next resistance
levels are the former highs. Longer
term, the assumption is that stocks are moving higher.
The VIX fell 6 %,
finishing below its 100 and 200 day moving averages (now resistance) and below
the upper boundary of its short term downtrend---pointing to higher stock
prices.
The long
Treasury again declined, this time by ¾ %, ending below its 100 day moving (now
support; if it remains there through the close on Friday, it will revert to
resistance), below its 200 day moving average (now resistance). It remained within its long term uptrend (though
it is very near the lower boundary) and short term downtrend.
The dollar fell fractionally,
closing above its 100 and 200 day moving averages (now support) and in short
term uptrend.
GLD had another
up day, but still ended below its 100 and 200 day moving average (now resistance)
and right on the upper boundary of its short term downtrend.
Bottom
line: the Averages appear to be breaking
away from their 100 day moving average; if so, then 26656/2874 (former highs)
will likely be the next stop and clearly gives support to the assumption that
stock prices will go even higher. The
pin action in TLT and UUP seem to be confirming a strong economy and higher
rates; GLD not so much.
Yesterday
in the charts (medium):
The
latest on oil (medium):
Fundamental
Headlines
Yesterday’s economic data
was mixed: weekly mortgage and purchase applications as well as the April trade
deficit were better than anticipated; however, first quarter nonfarm
productivity and unit labor costs were disappointing.
Aside
from some hot political headlines on Iran and the FBI (no comment) and minor
items on Italy, the ECB and the upcoming G7 meeting, there is very little on which
to comment. So I won’t.
***overnight,
the rhetoric ahead of the G7 meeting is heating up (medium):
And
another central banker begs the Fed to stop tightening (medium):
Bottom
line: it appears that investor euphoria has returned. Of course, follow through is still
needed. As you might expect, I am not
sure why stocks are popping. But that
doesn’t matter. What does matter is that
I not get sucked into chasing a rally at a time when valuations are at or near all-time
highs. Indeed, my strategy remains to
sell a portion of an equity that trades into its Sell Half Range.
One
man’s opinion (medium):
News on Stocks in Our Portfolios
Economics
This Week’s Data
US
Weekly
jobless claims fell 1,000 versus expectations of a 4,000 increase.
International
First quarter EU
economic growth slowed to its lowest level since Q3 2016.
April German
factory orders declined 2.5% versus estimates of a rise of 08%.
Other
More
on the solvency of the social security trust fund (medium):
More
on the Italian PM’s inaugural statement (medium):
More
on the ECB’s meeting next week (medium):
More
on the US employment stats (medium):
Merkel
warns of turmoil at upcoming G7 meeting (medium):
What
I am reading today
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