The Morning Call
1/23/14
A reminder that I leave for Costa
Rica bright and early tomorrow morning.
I will have my computer and if action is required I will be in touch.
The Market
Technical
The
indices (DJIA 16373, S&P (1844) were out of sync again (S&P up, Dow
down), but both closed within major uptrends across all timeframes: short term
(15841-20841, 1794-1947), intermediate term (15841-20841, 1688-2269) and long
term (5050-17400, 728-1900).
Volume
dropped; breadth weakened. The VIX was
up fractionally, remaining near the lower boundary of its short term trading
range. As long as it hangs around this
level, there is a chance of a challenge to that boundary, which, if successful,
would be a positive for stocks. It is
also in an intermediate term downtrend.
Insider
selling soars (short):
The
long Treasury had an off day but finished solidly within a short term trading
range and an intermediate term downtrend.
GLD
fell again, leaving it below its 50 day moving average and the lower boundary of
a very short term uptrend; both breaks were confirmed at the close yesterday.
Bottom line: the S&P still hasn’t been able to
re-challenge its all time high (1849), though it is drawing ever closer. If it fails to the upside, my attention turns
to the 1815 and 1794 (lower boundary of short term uptrend) which if breached
would confirm a double top. However, if
it smokes higher, then 17400/1900 become the upside targets. Until the Market out grows its current fit of
schizophrenia, we can only watch.
However, if one
of our stocks trades into its Sell Half Range, our Portfolios will act
accordingly.
Fundamental
Headlines
Yesterday’s
US economic news was meager pickings: weekly mortgage applications rose while
purchase applications fell; weekly retail sales were mixed. Nothing there.
Overseas,
the Chinese central bank injected funds in an attempt to ease credit concerns;
but with little result. This situation
is worsening; and if China experiences a Lehman Bros. moment, the repercussions
will likely spill over into the US. In
addition, the UK unemployment rate dropped.
Goldman
on the coming default in China (medium):
Bottom
line: yesterday was another meandering,
listless day. Technically, the Market is
churning in place. Fundamentally, it
feels like investors are all sitting around staring at each other and waiting
for some clarifying news event that will determine whether they buy or sell. You know how I feel: stocks are sufficiently
overvalued that we are facing either a prolonged period of Market stagnation or
a correction.
I
can’t emphasize strongly enough that I believe that the key investment strategy
today is to take advantage of the current high prices to sell any stock that
has been a disappointment or no longer fits your investment criteria and to
trim the holding of any stock that has doubled or more in price.
The
latest from Doug Kass (medium and a must read):
The
latest from Citi (medium):
Are
derivatives just a game in a giant casino (medium and a must read)?
Earnings
and revenue ‘beat’ rates so far (short):
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