The Morning Call
10/5/17
The
Market
Technical
The indices
(DJIA 22661, S&P 2537) continued their slow, steady climb (this is like a
broken record). Volume was down but
breadth continued to strengthen (ditto).
Both remain above their 100 and 200 day moving averages and are in
uptrends across all time frames.
The VIX (9.6) was
up 1 ¼ % (a third day of unusually positive performance for an up Market day). It ended below the upper boundary of its
short term downtrend, below its 100 and 200 day moving averages, below the
lower boundary of its long term trading range for a sixth day; but it is still
above its July low.
The long
Treasury rose pennies, finishing above its 200 day moving average (support) and
the lower boundaries of its short term trading range and its long term uptrend.
However, it is below its 100 day (now resistance)
and is developing a very short term downtrend.
http://www.marketwatch.com/story/bond-market-bears-are-back-with-a-vengeance-in-one-chart-2017-10-03
The dollar fell
again, remaining in its short term downtrend and below its 100 and 200 day
moving averages, but is developing a very short term uptrend.
GLD traded up, bouncing
up off its 100 moving average, above its 200 day moving averages (both support)
and the lower boundary of a short term uptrend. However, it is developing a very short term
downtrend.
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.
On the other
hand, all those gap openings from three Monday’s ago still need to be
closed. Despite some minor countertrends,
the nonstock indices continue to point to a slower economy, lower interest
rates---seemingly the opposite of the scenario prevalent among the stock boys.
I remain
uncomfortable with the overall technical picture.
Fundamental
Headlines
The
economic stats were the story of the day.
Following Tuesday very positive light vehicle sales, the September ISM
nonmanufacturing index was also a blowout number. In addition, the September Markit services
PMI came in slightly over estimates.
Overseas, the September EU composite PMI hit a four month high.
Bottom
line: whatever stats we get today and Friday, this week is going to be a major
plus for the global economies. Some of
the numbers have been surprising beats on the upside. The big question is, is this a one week
phenomena or a signal that the global economy has finally reached liftoff? The answer is, I don’t know. But it will only take another one to two
months of dataflow to know. The problem
is that the Harvey/Irma destruction data is going to start getting reflect in
the stats, which could mask the longer term growth trend. So going forward, interpreting the data is
going to be tricky.
Investing for Survival
Time
to rebalance you portfolio.
News on Stocks in Our Portfolios
Economics
This Week’s Data
The
September Markit services PMI came in at 55.3 versus expectations of 55.2.
The
September ISM nonmanufacturing index was reported at 59.8 versus estimates of
55.5.
The
August trade deficit was $42.4 billion versus forecasts of $42.5 billion.
Weekly
jobless claims fell 12,000 versus consensus of down 7,000.
Other
Leverage
in LBO’s the highest since the financial crisis (medium):
More
on the insolvency of public pension funds (medium):
Still
more (medium):
The
Fed will never end QE (medium):
Politics
Domestic
IRS hires
Equifax to safeguard taxpayer data (medium):
International
UK PM May in trouble (medium):
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