Monday, March 31, 2014

Monday Morning Chartology

The Morning Call

3/31/14

The Market
           
    Technical

     Monday Morning Chartology

            The S&P followed a set pattern last week, ramping higher in the morning, then trading lower through the rest of the day.  In the process, it made a lower high and a higher low, usually indicative of open battle between the bulls and bears.  One of two things will occur this week: either it trades in a very tight range violating neither the recent high nor the recent low or it breaks one way or the other.  If I had to bet, I would say the break is likely to come on the upside; but I don’t have to bet.



            The long Treasury traded down on Friday.  It closed above the upper boundary of its short term trading range.  Under out time and distance discipline that was sufficient to negate the trading range and re-set it to a short term uptrend.  In the chart I have redrawn the short term uptrend.  However, Friday’s pin action was big enough on the downside that I am going to defer re-setting the short term trend until the close today.



            GLD had a rough go of it last week, breaking its very short term uptrend.  It is now in a short term and intermediate term downtrend and finished below its 50 day moving average.



            The VIX continues to be of little value in assessing Market direction.  It remains stuck in a yearlong short term trading range as well as an intermediate term downtrend and closed above its 50 day moving average.



            From the Sentiment Trader:

Active investment managers have continued their extreme exposure to stocks. Even the most bearish manager is net long stocks, according to the National Association of Active Investment Managers. This week's data show the average exposure, spread between most bullish and most bearish managers and confidence among all managers is at extremes seen only two other times in the 8-year history of the survey. Those were early January 2007 and early January 2014. Both times proved to be somewhat troublesome for the most bullish managers in the weeks ahead.

Update on NYSE margin debt (short):

            Update on ‘the best stock market indicator ever’ (short):

    Fundamental
    
            Shiller on bubbles (short):

            Will profit margins mean revert? (short):

           News on Stocks in Our Portfolios
 
Economics

   This Week’s Data

   Other

            Japan get double whammy (short):

Politics

  Domestic

Lowry on Obamacare (medium):

  International

            New report coming on global warming (medium):

            Condi Rice on Obama’s foreign policy (medium):

            Krauthammer on Obama’s foreign policy (medium):

            Over the weekend (medium):
                Stephan Roach on Chinese central planning (medium):
            Bank loan write offs soar at Chinese banks (medium):
                        China also fighting corruption (medium):









Steve Cook received his education in investments from Harvard, where he earned an MBA, New York University, where he did post graduate work in economics and financial analysis and the CFA Institute, where he earned the Chartered Financial Analysts designation in 1973. His 40 years of investment experience includes institutional portfolio management at Scudder, Stevens and Clark and Bear Stearns. Steve's goal at Investing For Survival is to help other investors build wealth and benefit from the investing lessons he learned the hard way.

Saturday, March 29, 2014

Thoughts on Investing

Thoughts on Investing---from the Motley Fool

            50 Unfortunate Truths about Investing (26-50)

26. Most IPOs will burn you. People with more information than you have want to sell. Think about that.
27. When someone mentions charts, moving averages, head-and-shoulders patterns, or resistance levels, walk away.
28. The phrase "double-dip recession" was mentioned 10.8 million times in 2010 and 2011, according to Google. It never came. There were virtually no mentions of "financial collapse" in 2006 and 2007. It did come.
29. The real interest rate on 20-year Treasuries is negative, and investors are plowing money into them. Fear can be a much stronger force than arithmetic.
30. The book Where Are the Customers' Yachts? was written in 1940, and most still haven't figured out that financial advisors don't have their best interest at heart.
31. The low-cost index fund is one of the most useful financial inventions in history. Boring but beautiful. 
32. The best investors in the world have more of an edge in psychology than in finance.
33. What markets do day to day is overwhelmingly driven by random chance. Ascribing explanations to short-term moves is like trying to explain lottery numbers.
34. For most, finding ways to save more money is more important than finding great investments.
35. If you have credit card debt and are thinking about investing in anything, stop. You will never beat 30% annual interest. 
36. A large portion of share buybacks are just offsetting shares issued to management as compensation. Managers still tout the buybacks as "returning money to shareholders."
37. The odds that at least one well-known company is insolvent and hiding behind fraudulent accounting are high.
38. Twenty years from now the S&P 500 (INDEX: ^GSPC  ) will look nothing like it does today. Companies die and new ones emerge.
39. Twelve years ago General Motors (NYSE: GM  ) was on top of the world and Apple (Nasdaq: AAPL  ) was laughed at. A similar shift will occur over the next decade, but no one knows to what companies.
40. Most would be better off if they stopped obsessing about Congress, the Federal Reserve, and the president and focused on their own financial mismanagement. 
41. For many, a house is a large liability masquerading as a safe asset.
42. The president has much less influence over the economy than people think.
43. However much money you think you'll need for retirement, double it. Now you're closer to reality.
44. The next recession is never like the last one. 
45. Remember what Buffett says about progress: "First come the innovators, then come the imitators, then come the idiots."
46. And what Mark Twain says about truth: "A lie can travel halfway around the world while truth is putting on its shoes."
47. And what Marty Whitman says about information: "Rarely do more than three or four variables really count. Everything else is noise."
48. The bigger a merger is, the higher the odds it will be a flop. CEOs love empire-building by overpaying for companies.
49. Investments that offer little upside and big downside outnumber those with the opposite characteristics at least 10-to-1.
50. The most boring companies -- toothpaste, food, bolts -- can make some of the best long-term investments. The most innovative, some of the worst


The Closing Bell

The Closing Bell

3/29//14

Statistical Summary

   Current Economic Forecast

           
            2013

Real Growth in Gross Domestic Product:                    +1.0-+2.0
                        Inflation (revised):                                                           1.5-2.5
Growth in Corporate Profits:                                            0-7%

            2014 estimates

                        Real Growth in Gross Domestic Product                   +1.5-+2.5
                        Inflation (revised)                                                          1.5-2.5
                        Corporate Profits                                                            5-10%

   Current Market Forecast
           
            Dow Jones Industrial Average

                                    Current Trend (revised):  
                                    Short Term Trading Range                     15330-16601
Intermediate Uptrend                              14696-16601
Long Term Uptrend                                 5050-17400
                                               
                        2013    Year End Fair Value                                   11590-11610

                    2014    Year End Fair Value                                   11800-12000                                          

            Standard & Poor’s 500

                                    Current Trend (revised):
                                    Short Term Uptrend                                     1786-1963
                                    Intermediate Term Uptrend                        1742-2442
                                    Long Term Uptrend                                    739-1910
                                                           
                        2013    Year End Fair Value                                    1430-1450

                        2014   Year End Fair Value                                     1470-1490         

Percentage Cash in Our Portfolios

Dividend Growth Portfolio                          43%
            High Yield Portfolio                                     47%
            Aggressive Growth Portfolio                        46%

Economics/Politics
           
The economy is a modest positive for Your Money.   This week’s data weighed to the plus side: positives---weekly purchase applications, February new home sales, the January Case Shiller new home price index, weekly jobless claims, March consumer confidence, the March Chicago National Activity Index, the March Kansas City Fed manufacturing index, February personal income and fourth quarter 2013 corporate profits; negatives---weekly mortgage applications, February pending home sales, the March flash PMI and the March Richmond manufacturing index; neutral---weekly retail sales, the February combo of durable goods orders and orders, ex transportation, February personal spending, March consumer sentiment and revised fourth quarter 2013 GDP growth and price index. 

This heavy leaning towards a more upbeat economic outlook provides another step up in confidence that weather was indeed the primary driver in the recent deterioration in the numbers and that our forecast remains on track.  I must admit that the durable goods orders, ex transportation is a little concerning but it was offset by the preponderance positive data.  The warning light will likely stay lit for another couple of weeks but the trend in the economic stats is clearly encouraging.  Our forecast remains:

 ‘a below average secular rate of recovery resulting from too much government spending, too much government debt to service, too much government regulation, a financial system with an impaired balance sheet, and a business community unwilling to hire and invest because the aforementioned along with...... the historic inability of the Fed to properly time the reversal of a vastly over expansive monetary policy.’

        The pluses:

(1)   our improving energy picture.  The US is awash in cheap, clean burning natural gas.... In addition to making home heating more affordable, low cost, abundant energy serves to draw those manufacturers back to the US who are facing rising foreign labor costs and relying on energy resources that carry negative political risks.

       The negatives:

(1)   a vulnerable global banking system.  In addition to passing last week’s Fed stress test, this week most of the banks received approval for the dividend and stock buyback plans. As I noted last week, it would be a shock if banks’ financial condition weren’t improving given Fed’s largess in providing a continuing free interest rate arbitrage.  That said, before tip toeing through the tulips, I would encourage you to bear in mind that the banks still have massive counterparty risk via their exposure to derivatives.  In addition, the regulators thought that they had the financial system’s risk management under control in 2008 [because Ben said exactly that]; and we know how that turned out.

‘My concern here.....that: [a] investors ultimately lose confidence in our financial institutions and refuse to invest in America and [b] the recent scandals are simply signs that our banks are not as sound and well managed as we have been led to believe and, hence, are highly vulnerable to future shocks, particularly a collapse of the EU financial system.’

(2)   fiscal policy.  our political elite continue to keep a low profile save for the ongoing disaster that is Obamacare and Obama’s proclivity for pontificating [this time to Russia] versus really doing something.  As I have said before, I think it likely that the mischief level will remain low for the remainder of the year as the ruling class focuses on electioneering versus doing anything to help the economy.

(3)   the potential negative impact of central bank money printing:  The key point here is that [a] the Fed has inflated bank reserves far beyond any comparable level in history and [b] while this hasn’t been an economic problem to date, {i} it still has to withdraw all those reserves from the system without creating any disruptions---a task that I regularly point out it has proven inept at in the past and {ii} it has created or is creating asset bubbles in the stock market as well as in the auto, student and mortgage loan markets. 

Little was done this week to alleviate the confusion over the time table of the Fed’s transition policy.  In individual speeches, dovish member sounded more hawkish and vice versa to the point where investor whiplash was obvious.  I still think that the Fed is totally perplexed about how extract itself from QEInfinity and that raises the risk that it will bungle the transition.

That said, the quicker the Fed starts to unwind its ultra easy monetary policy, the less pain the economy and the Markets will have to endure---and to be clear, I think that there will be pain especially in the securities markets.  But every drunk has to sober up; better to start the hang over now than wait and feel even worse.

      Thoughts from Rick Santelli (2 minute video):

(4)   a blow up in the Middle East or someplace else.  The diplomatic turmoil over Ukraine’s future continues even as Putin consolidates his Crimean acquisition.  The problem is the turmoil is mostly rhetorical versus anything substantive. The sanctions imposed thus far have been less than a hand slap.  Meanwhile, Putin is building Russian military forces on the eastern Ukrainian border and strengthening relations with China and India as an offset to any meaningful sanctions---were they to come.  

Jim Rogers on the sanctions (medium):

I repeat my bottom line, outlined in Thursday’ Morning Call: ‘If He [Obama] would actually do something (pledge to reinvigorate NATO, resume negotiating the treaties with Poland and the Czech Republic) to project American power and show Putin that He is dead serious about preventing further expansion from Russia, I could get behind the Guy.  Sure it would likely send nervous tremors through the Markets---but it would be a long term positive.  But trying to scare Putin with a lot diplomatic bullshit accomplishes nothing because Putin doesn’t care and doesn’t respect Obama enough to think that anything He does will materially impact Russia.  Indeed as I have voiced many times, my concern is that Putin responds to these antics by kicking Obama in groin, humiliating Him publicly.  I suspect that the Markets would be even less enthralled with this scenario.’

Meanwhile, Putin called Obama yesterday afternoon---though there are dramatically different accounts of what was said (medium):


(5)   finally, the sovereign and bank debt crisis in Europe and around the globe.  The EU addressed the solution to its problem this week when the ECB proposed easing monetary conditions by imposing negative interest rates and increasing its willingness to buy the toxic assets currently housed in the EU banking system.  I am not sure the latter solves any problems in that all that would change is the location of a nonperforming asset.  Indeed, if the new liquidity provided to the banks is used to buy more sovereign debt of insolvent sovereigns, then matters will have gotten worse.


Because the banks certainly aren’t lending money to corporations or individuals (medium):

In addition, the financial turbulence in China is only getting worse.  This week’s events include bank runs, shrinking credit availability and a declining yuan and stock market.  To its credit the Bank of China has thus far managed this crisis reasonably well---the risk, of course, being that problems simply overwhelm it. 

Bottom line:  the economic data continues to improve from a month ago. As a result, I believe that it is likely that our forecast is on track though I am going to wait another week before switching the warning light off.

Fed policy remains somewhat confusing with the hawks sounding like doves and the doves sounding like hawks this week.  I continue to view this as weakness though there is a case to be made that the Fed is becoming more aggressive in its attitude toward the transition to normalized monetary policy.  Either way, I believe that the odds have gone up that the Fed will bungle the transition.  On the other hand, I am partial to a faster move to the tightening alternative for the simple reason that the inevitable economic and Market pain will be less, the quicker the process begins.

The Chinese central bank continues its policy of re-introducing ‘moral hazard’ into the investment equation.  To its credit, it has managed the process reasonable well to date.  Plus yesterday, a high ranking Chinese official made noises about the government instituting a stimulus program.   That wouldn’t solve the long term problem but it would paper over it in the near term.

The weak EU and Japanese economies are also areas of concern.  The ECB is talking like it may impose negative interest rates on bank reserves and/or buy a slug of the toxic assets that remain on bank balance sheets---dreaming that what hasn’t worked in the US or Japan will somehow work there.

And this from Japan (medium):

Finally, a flare up Ukraine would likely put upward pressure on oil prices which would in turn negatively impact the global economy.  I keep thinking that the US won’t do anything stupid enough to precipitate such an outcome and then I watch Obama yakking on the six o’clock news and have my doubts.

In sum, there are a lot of potential problems overseas lurking in the weeds that could disrupt global economic growth but they have thus far been contained.  So I leave my ‘muddling through’ scenario in place with the warning light flashing.

This week’s data:

(1)                                  housing: weekly mortgage applications declined while purchase applications rose; February new home sales dropped less than forecast; February pending home sales were down but in line; the January Case Shiller home price index increased slightly,

(2)                                  consumer:  weekly retail sales were mixed; weekly jobless claims fell more than estimates; March consumer confidence was quite strong while consumer sentiment was in line, February personal income was slightly above consensus while personal spending and the price deflator were right on,

(3)                                  industry: February durable goods orders advanced more than anticipated but ex transportation, they rose less; the March Chicago Fed National Activity Index came in better than expected while the March flash PMI was worse; the March Richmond Fed manufacturing index decreased more than consensus while the Kansas City Fed index was much improved,

(4)                                  macroeconomic: revised fourth quarter GDP growth came in at 2.6% versus estimates of 2.7%; the price deflator was 1.6%, in line; and corporate profit growth was +6.0% versus forecasts of +5.6.

The Market-Disciplined Investing
           
  Technical

`           The indices (DJIA 16323, S&P 1857) had another volatile week.  They followed a pattern of being up strong in the morning and then giving most if not all of it back by the close.  For the week, the Dow was up fractionally and the S&P was off. 

The S&P closed within uptrends across all timeframes: short (1786-1963), intermediate (1742-2542) and long (739-1910).  The Dow remains within short (15330-16601) and intermediate (14696-16601) term trading ranges and a long term uptrend (5050-17400).  They continue out of sync in their short and intermediate term trends---which leaves the Market trendless.

Volume on Friday fell; breadth improved after a tough week.  The VIX declined.  It continues to offer no directional help with the Market, finishing within its short term trading range and intermediate term downtrend and right on its 50 day moving average. 

The long Treasury busted through the upper boundary of its short term trading range this week, though it fell on Friday.  While it remained above the upper boundary of its short term trading range for the requisite period under the time element of our discipline, Friday’s decline was big enough that I am delaying until Monday the call to re-set the short term trend to up. 

However, if it holds it will be doing so in the face of overwhelming stock Market opinion that the economy is improving---not an occasion that is usually accompanied by falling interest rates.  The most obvious scenarios conducive to a price advance are (1) recession/deflation or (2) a flight to safety [think Ukraine].  Neither makes a lot of sense given the news flow.  So either the bond guys think that they know something the stock guys don’t or there is some technical factor that will be soon corrected (part of the reason I am waiting another day to make the break out call).  

GLD continued its short term sell off, finishing within a short and intermediate term downtrend and below its 50 day moving average.  Clearly, any thoughts about nibbling have been shelved.  I am now watching how GLD handles its double bottom lows (lower boundary of its long term trading range).

Bottom line:  it was a volatile sideways week.  But the bulls won the last hole, so they have the honor.  Barring bad news out of one of our potential risk areas (Japanese economy, EU economy, Chinese financial markets, Ukraine), the price direction is flat to up.  That suggests at least a try at penetrating the upper boundaries of the Averages long term uptrends.  However, given the growing number and magnitude of divergences, I believe that they will hold.

Meanwhile, we have a trendless Market; so there is really not much to do save using any price strength that pushes one of our stocks into its Sell Half Range and to act accordingly.

                Market performance in mid-term election year (short):

   Fundamental-A Dividend Growth Investment Strategy

The DJIA (16323) finished this week about 39.8% above Fair Value (11675) while the S&P (1857) closed 28.2% overvalued (1449).  Incorporated in that ‘Fair Value’ judgment is some sort of half assed attempt at getting fiscal policy under control, a botched Fed transition from easy to tight money, a historically low long term secular growth rate of the economy and a ‘muddle through’ scenario in Europe and China.

This week’s economic stats once again reflected our forecast.  Nonetheless, as I noted above, I am leaving the yellow light flashing at least for another week or two.  Of course, as long as investors’ mentality is that good news is good news and bad news is good news, I am not sure the economy matters to the Market in the near term scheme of things---although I do suspect that a full-fledged recession accompanied by deflationary pressures would tighten some sphincters.  Importantly though, the fact that economy is not going into recession doesn’t impact our Models at all.  In other words, a slow recovery is built into our numbers; and the fact that it is looking more likely than a month ago has no effect on stock values.

Tapering for pussies continues apace; but the longer term course of Fed policy remains uncertain.  As I noted above, neither time nor additional comments from multiple FOMC members have brought any clarity.  I believe this a sign that the Fed doesn’t have a clue how to unwind its record monetary expansion which in turn means that the probability of it mucking up the transition is even higher than I originally suspected.  All that said, there is an alternative scenario and that is that Yellen is dead serious about tightening faster than any of us thought.  That would probably not be well received by the Markets though cumulatively, it would be the less painful alternative.

Finally, the risks are growing for potential negative events overseas.  China heads the list as its economy slows and its financial markets are going through a massive deleveraging.  So far the Bank of China has successfully contained the damage; but the risk is that it gets overwhelmed.   Japan and to a lesser extent the EU are having problems getting any economic growth.  Japan is in much worse shape in that it has far fewer policy levers to pull in as much as Abe has already made our Fed look like a bunch of pikers.  The major risk to the securities markets from both China and Japan is the unwinding/repricing of their carry trade.

Ukraine is like a bad case of the herpes---you can’t get rid of it.   Obama is walking around like a deer in the headlights while Putin is boppin’ n jivin’ and handing out high fives like he just won the Super Bowl.  Meanwhile he builds up the military on Ukraine’s eastern border, imposes his own sanctions and cuts trade deals with the Chinese and Indians.  The risks are that (1) Russian minorities in eastern Ukraine are suddenly ‘targeted’ for persecution and ask for Putin’s help or (2) Obama pushes His luck, pisses Putin off and gets punched in the face. My guess is that neither would be well received by the Markets.

Overriding all of these considerations is the cold hard fact that stocks are considerably overvalued not just in our Model but with numerous other historical measures which I have documented at length.  This overvaluation is of such a magnitude that it almost doesn’t matter what occurs fundamentally, because there is virtually no improvement in the current scenario (improved economic growth, responsible fiscal policy, successful monetary policy transition) that gets valuations to Friday’s closing price levels.  Indeed, the problem is that any revision in the economic outlook from here is more likely to be negative than positive.

Bottom line: the assumptions in our Economic Model haven’t changed and the risks that they might are diminishing.

The assumptions in our Valuation Model have not changed either.  I remain confident in the Fair Values calculated---meaning that stocks are overvalued.  So our Portfolios maintain their above average cash position.  Any move to higher levels would encourage more trimming of their equity positions.

 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.
            
                For the bulls (medium):

            Counterpoint from Seth Klarman (medium):

            Chinks in the armor (medium):


DJIA                                                   S&P

Current 2014 Year End Fair Value*              11900                                                  1480
Fair Value as of 3/31/14                                  11675                                                  1449
Close this week                                               16323                                                  1857

Over Valuation vs. 3/31 Close
              5% overvalued                                12258                                                    1521
            10% overvalued                                12842                                                   1593 
            15% overvalued                                13426                                                    1666
            20% overvalued                                14010                                                    1738   
            25% overvalued                                  14593                                                  1811   
            30% overvalued                                  15177                                                  1883
            35% overvalued                                  15761                                                  1956
            40% overvalued                                  16345                                                  2028
            45%overvalued                                   16928                                                  2101

Under Valuation vs. 3/31 Close
            5% undervalued                             11091                                                      1376
10%undervalued                            10507                                                       1304   
15%undervalued                             9923                                                    1231

* Just a reminder that the Year End Fair Value number is based on the long term secular growth of the earning power of productive capacity of the US economy not the near term   cyclical influences.  The model is now accounting for somewhat below average secular growth for the next 3 to 5 years with somewhat higher inflation. 

The Portfolios and Buy Lists are up to date.


Steve Cook received his education in investments from Harvard, where he earned an MBA, New York University, where he did post graduate work in economics and financial analysis and the CFA Institute, where he earned the Chartered Financial Analysts designation in 1973.  His 40 years of investment experience includes institutional portfolio management at Scudder. Stevens and Clark and Bear Stearns, managing a risk arbitrage hedge fund and an investment banking boutique specializing in funding second stage private companies.  Through his involvement with Strategic Stock Investments, Steve hopes that his experience can help other investors build their wealth while avoiding tough lessons that he learned the hard way.








Friday, March 28, 2014

Morning Journal--George Will on Obama

 News on Stocks in Our Portfolios

o    Accenture (ACN): FQ2 EPS of $1.03 misses by $0.01.
o    Revenue of $7.13B (+1.0% Y/Y) misses by $80M.
·         Paychex (PAYX): FQ3 EPS of $0.44 beats by $0.02.
·         Revenue of $636.50M (+7.3% Y/Y) beats by $7.65M.
 
Economics

   This Week’s Data

            February pending home sales dropped 0.8%, in line.

            The March Kansas City Fed manufacturing index came in at 10.0 versus expectations of 5.0.

                February personal income was up 0.3% versus estimates of up 0.2%; personal spending was up 0.3%, in line; the PCE price deflator was +0.1%, also in line.

   Other

Politics

  Domestic

  International

            George Will on Obama and Ukraine (medium):
           
                Russia determined to go its own way (medium):


The Morning Call---the US economy is not the problem

The Morning Call

3/28/14

The Market
           
    Technical

            The indices (DJIA 16264, S&P 1849) followed the same playbook that it has operated off of all week---a ramp up at the open and then a drift lower the rest of the day.  Yesterday, both were down.  The S&P finished within uptrends across all timeframes: short (1786-1963), intermediate (1738-2538) and long (739-1910).  The Dow remains within short (15330-16601) and intermediate (14696-16601) term trading ranges and a long term uptrend (5050-17400). They continue out of sync in their short and intermediate term trends---which leaves the Market trendless.

            Volume fell; breadth was mixed.  The VIX declined, finishing within its short term trading range and its intermediate term downtrend and above its 50 day moving average.

            The long Treasury rose again, closing above the upper boundary of its short term trading range for the second day.  If it remains over that boundary at the end of trading today, the trading range will be negated and will re-set to a short term uptrend.

            GLD dropped, finishing within its short and intermediate term downtrends and below its 50 day moving average.

Bottom line:  with yesterday’s decline, the Averages have now put in a second lower high.  That is a short term judgment, so I am not suggesting a Market top.  But the indices are out of sync and coupled with the mounting divergences, they may be in the process of raising a warning flag.  However, that means little until additional trend lines began to be violated and that has not happened.

In other words, the trend is flat to up until it is not.  So it seems likely to me that the upper boundaries of the Averages long term uptrends are apt to be challenged---though the weakening Market internals may be indicating that those boundaries are as good as it is going to get.

A new development that is more confusing than it is concerning is the behavior of other Markets.  As I noted yesterday the long Treasury is close to breaking to the upside (higher prices, lower yields) which is not consistent with an improving economy or a tighter Fed while GLD has already broken its very short term uptrend which is consistent with a tighter Fed.  It is still too early to be getting concerned but not too early to be paying close attention.

Here is the answer on what is going on in gold (medium):

 Meanwhile, we have a trendless Market; so there is really not much to do save using any price strength that pushes one of our stocks into its Sell Half Range and to act accordingly.

            The latest from the Stock Trader’s Almanac (short):

            Update on sentiment (short):

    Fundamental
    
     Headlines

            Yesterday’s US economic data was generally upbeat: February pending home sales  were down but in line, weekly jobless claims fell more than expected, the revised fourth quarter GDP growth and price index were in line though corporate profits were slightly better than anticipated and the March Kansas City Fed  manufacturing index was double forecasts.  In short, the trend to better data continues.

            No real new news from the EU, China or Japan.  Ukraine did reject the proposed IMF bailout which I reported yesterday; but beyond that all was quiet.
           
            ****overnight (medium):

Bottom line: no changes: (1) the economy continues to look healthier than it did a month ago, (2 ) the uncertainties around Fed policy, the Japanese and EU economies, the Chinese financial system and the Ukrainian/US/Russia standoff lurk in the weeds as potential disruptive elements and (3) stocks are considerably overvalued.

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.

            Bear in mind, this is not a recommendation to run for the hills.  Our Portfolios are still 55-60% invested and their cash position is a function of individual stocks either hitting their Sell Half Prices or their underlying company failing to meet the requisite minimum financial criteria needed for inclusion in our Universe.
        
            It is a cautionary note not to chase this rally.
               
            Investing in uncertain markets (medium):

            S&P is now overvalued on forward earnings (short):

      Investing for Survival

            The problem with reverse mortgages (medium):
            




Steve Cook received his education in investments from Harvard, where he earned an MBA, New York University, where he did post graduate work in economics and financial analysis and the CFA Institute, where he earned the Chartered Financial Analysts designation in 1973. His 40 years of investment experience includes institutional portfolio management at Scudder, Stevens and Clark and Bear Stearns. Steve's goal at Investing For Survival is to help other investors build wealth and benefit from the investing lessons he learned the hard way.