The Morning Call
11/14/16
The
Market
Technical
As
you can see, the S&P bounced off its 200 day moving average and didn’t look
back until both the 100 and 200 day moving averages reverted from resistance to
support and a very short term downtrend had been successfully challenged. It is now back within the trading range going
back to June of this year but still has some work to do before it challenges
the upper boundary of that trading range.
That said, the Dow will reset its short term trend back to up today
barring a 150 point decline. Unless that
occurs, the Averages will then be out of sync and we will just have to wait to
see which trend prevails.
There
is not a lot of good to say about the TLT chart. The long Treasury is now below its 100 day
moving average (now resistance), the 200 day moving average (now resistance, in
a short term trading range (reset on Friday), below the lower boundary of its
intermediate term uptrend (if it remains there through the close today, it will
reset to a trading range). The only
support between its current price and the lower boundary of its long term
uptrend is the newly reset lower boundary of its short term trading range. The uglier this gets, the greater the
pressure on the equity discount factor.
GLD
is another terrible looking chart. It is
now below its 100 and 200 day moving averages (both resistance), is in short
term downtrend (near its lower boundary) and save for a couple of Fibonacci
retracement levels has little support between its current price and the lower
boundary of its intermediate term trading range, circa 100.
As
to be expected, the VIX got whacked last week as stocks soared. It finished the week below its 100 day moving
average (now resistance), below its 200 day moving average (now support; if it
remains there through the close on Wednesday, it will revert to resistance) and
within a short term downtrend. However,
it continues in a very short term uptrend.
I said this the last time the VIX challenged its very short term uptrend
and I will say it again---if that uptrend holds, stocks may not have a lot of upside
left.
Fundamental
Headlines
***overnight,
third quarter Japanese GDP came in ahead of estimates while household spending
and capital investment were flat; October Chinese retail sales and industrial
output were below expectations while fixed asset investment was in line.
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