Tuesday, May 17, 2016

The Morning Call--Everything is awesome

The Morning Call

5/17/16

The Market
         
    Technical

The indices (DJIA 17710, S&P 2066) rallied hard off of last week’s disappointing performance, though volume was flat and breadth mixed.   The VIX fell 2.5% but that was actually less than I would have thought; it continues to act as if it has made a bottom.

            The VIX is too low (short):

The Dow closed [a] above its 100 day moving average, now support, [b] above its 200 day moving average, now support, [c] within a short term trading range {17498-18736}, [c] in an intermediate term trading range {15842-18295} and [d] in a long term uptrend {5541-19413}.

The S&P finished [a] above its 100 day moving average, now support, [b] above its 200 day moving average, now support, [c] in a short term trading range {2039-2110}, [d] in an intermediate term trading range {1867-2134} and [e] in a long term uptrend {830-2218}. 

The long Treasury fell, ending back below the upper boundary of a very short term downtrend, but within a short term uptrend, over its 100 day moving average and a key Fibonacci support level.

GLD was up, closing within very short term and short term uptrends as well as above its 100 day moving average.  It is continuing to eye the upper boundary of its intermediate term trading range.

Soros adds to his gold holdings (short):

Bottom line: despite all the jubilation yesterday, the move up was on low volume, mixed breadth and left the Averages within very short term downtrends.  As long as they remain above the lower boundaries of their short term trading ranges, the technical damage in minimal.  So I am watching how they behave around those boundaries as well as their very short term downtrends.  
           
    Fundamental

       Headlines

            Yesterday’s US economic news was a downer---the May NY Fed manufacturing index was awful while the NAHB index was just below expectations.  Overseas, the Chinese economy continues to disappoint---to the extent that we know even a rough approximation of the numbers.

            ***overnight. UK inflation came in below expectations, first quarter French GDP was reported below estimates while debt to GDP was reported above.

            Bottom line: so everything remains awesome!  Right?  What could possibly be of concern with the economies of China, Japan, the US and, at least, chunks of Europe slowing, US corporate earnings growth flattening and the possibility of a Grexit or Brexit or both approaching?  But, but, oil prices are up---which we are being told is a major plus by the same group who told us that declining oil prices were a major plus.  And me without my spoon.

            Whatever the bulls are selling, I am not buying.  I continue to believe that cash may be the most valuable asset in your portfolio.

       Investing for Survival
   
            Savings and future returns.
           
    News on Stocks in Our Portfolios
 
Home Depot (NYSE:HD): Q1 EPS of $1.44 beats by $0.09.
Revenue of $22.76B (+9.0% Y/Y) beats by $410M


Economics

   This Week’s Data

            The May National Association of Homebuilders index came in at 58 versus expectations of 59.

            April CPI was up 0.4% versus estimates of up 0.3% while CPI, ex food and energy was in line.

            April housing starts were up 7.6% versus forecasts of up 4.2%

   Other

            The recent history of household net worth (medium):

Politics

  Domestic

Quote of the day (short):

Confessions of a congressman (medium and today’s must read):

  International War Against Radical Islam


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