The Morning Call
11/7/17
The
Market
Technical
The indices
(DJIA 23548, S&P 2591) were up slightly on the day (still the relentless
drive higher). Volume was flat; breadth improved
marginally. Both remain above their 100
and 200 day moving averages and are in uptrends across all time frames.
The VIX (9.4)
was up 2 7/8 %---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 below the lower boundary of its long term trading
range for the second day (if it remains there through the close on Wednesday,
it will reset to a downtrend). It is on
the verge of a directional change, indicating continued higher stock
prices. The only remaining question is,
will it successfully challenge its July low 8.8)?
This is a bit
long and in the weeds, but it helps explain the building price risk not just in
the VIX but in stocks (medium):
The long
Treasury was up, ending above its 200 day moving average (now support), above
the lower boundaries of its short term trading range and long term uptrend and above
its 100 day moving average for the second day (now resistance; if it remains
there through today [in the Closing Bell, I said Monday---my mistake], it will
revert to support). It is a short hair
away from a trend change---pointing to lower long term rates or a safety trade.
(both must reads):
And:
The dollar fell,
still ending below its 200 day moving average (now resistance), back below the
upper boundary of its short term downtrend, but above its 100 day moving
average (now support) and continues to develop a very short term uptrend.
GLD rose 7/8 %,
finishing above its 100 day moving average (now resistance; if it remains there
through the close on Wednesday, it will revert to support), above but still
close to its 200 day moving average (support) and the lower boundary of a short
term uptrend. Again, potential trend
change, I just don’t know which direction.
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.
I remain
uncomfortable with the overall technical picture.
Fundamental
Headlines
No
economic data was released either here or abroad. But there was still some noteworthy items:
(1)
Merger Monday: Broadcom/QCOM: rumors DIS/FOX
(2)
the house has begun marking up the GOP tax bill. It is pretty much a given that the bill will
change. Just to be sure to gain valuable
camera time, McCain says tax reform dead in the senate (medium):
(3)
rumors Trump is drafting executive order to eliminate
Obamacare individual mandated (medium):
(4)
NY Fed head, Dudley resigning early (medium). As a middle of the road kind of guy, his replacement
will have significance:
http://www.zerohedge.com/news/2017-11-06/its-official-ny-fed-president-bill-dudley-retiring-mid-2018
(5)
Middle East in an uproar that is driving oil prices
higher.
Second
Saudi prince killed in shoot out (short):
Lebanese PM resigns (medium):
***overnight, Saudi Arabia says
Lebanon declared war against it (medium):
Or is it all about the money? Or
both? (medium):
Bottom line: following
a week of big economic releases and major fiscal/monetary developments, this one
may a bit calmer. Few data reports,
Trump is gone, the house is busy trying to improve tax reform. That should keep the animal spirits flowing
with no major worries to be faced immediately and the M&A space heating up
a bit---the latter being a perfect example of why cutting the taxes on these
huge corporations are not going to increase investment and create jobs. They will just use the money to buy back
stock (to improve their bonuses) and buy other companies (which will invariably
lead to the elimination of ‘duplicate’ expenses, i.e. jobs).
Having said that, some idiot will lob a
missile into a crowd. But I am sure that everything will remain awesome.
My thought for the day: Be careful when reading about how stupid investors can be
and not realize you're reading about yourself.
Investing for Survival
Investment
apathy and realizing your financial goals.
News on Stocks in Our Portfolios
Economics
This Week’s Data
Other
Nouriel
Roubini on tax reform (medium):
More
on the EU economy’s improving growth (medium):
On
the other hand, more on the internal EU banking imbalances (medium):
Framing
lumber prices up sharply (short):
Hotel
occupancy strong (short):
Politics
Domestic
The Paradise Papers
(a brief explanation):
International
The
post WWII history of US war making (medium):
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