Friday, April 7, 2017

The Morning Call--Trump's Johnson

The Morning Call


The Market

The indices (DJIA 20662, S&P 2355) drifted higher yesterday.  This pin action was a pretty weak follow through to Wednesday’s big intraday reversal, leaving the Averages below the upper boundaries of their very short term downtrends. Volume fell; breadth was mixed.  The VIX (12.4) declined 3 ¾ %, but ended above the lower boundary of its very short term uptrend, back above its 100 day moving average for the second day (now resistance; if it remains there through the close today, it will revert to support), below its 200 day moving average (now resistance) and in a short term downtrend.  Complacency remains an issue.
The Dow closed [a] above its 100 day moving average, now support, [b] above its 200 day moving average, now support, [c] in a short term uptrend {19268-21635}, [c] in an intermediate term uptrend {11891-24743} and [d] in a long term uptrend {5751-23390}.

The S&P finished [a] above its 100 day moving average, now support, [b] above its 200 day moving average, now support, [c] within a short term uptrend {2254-2587}, [d] in an intermediate uptrend {2082-2686} and [e] in a long term uptrend {905-2591}.

The long Treasury was down fractionally, remaining above its 100 day moving average (now support), below its 200 day moving average (now resistance), near a minor resistance level, in a very short term downtrend and in a short term trading range.


GLD was unchanged, closing above its 100 day moving average (now support), below but nearing its 200 day moving average (now resistance) and within a short term downtrend. 

The dollar declined, ending below its 100 day moving average (now resistance), above but near its 200 day moving averages (now support), in a very short term downtrend and in a short term uptrend.

Bottom line: the tentative character of this recent Market was manifest again in yesterday’s trading---not much follow through to Wednesday’s reversal, but little movement in the opposite direction.  On the other hand, the news flow gave investors plenty of reason to sell and that didn’t happen.  Still, the very short term downtrend remains intact.  It seems like no matter the import of a headline (development), it is not enough to jar either buyers or sellers loose from their pre-existing investment scenarios.  So it would appear that it will take something extraordinary to break that mindset.

            Smart money versus dumb money (medium):

            The value of technical indicators (short):



            Yesterday’s economic data was mixed: weekly jobless claims declined more than expected while March retail chains store sales fell from the February pace.

            Overseas, the March Chinese services and composite PMI’s hit a six month low; Greece may be near to receiving its next round of bail out funds and the ECB took a lesson out of the Fed’s playbook with two officials simultaneously advocating changing and not changing monetary policy.

            However, politics once again were the main headline.  First the GOP held another ‘we are really working hard to amend healthcare’ news conference.  Again whether they mean it or are just trying to be able to tell their various constituencies that they are making progress when they go on Easter break next week is anyone’s guess.  But it gives the dreamweavers something to cling to.

            Second, international politics moved to center stage as:

(1)   the US retaliated to the recent alleged gas attack on civilians by the Syrian government.  What has me both mystified and concerned by this action is that during Trump’s campaign, he repeatedly berated Bush for getting involved in Iraq and Obama’s actions in Libya.  Then recently, the administration stated that regime change is Syria was not a prerequisite for a solution.  Kudos to him. 

Now suddenly the US is morally outraged by civilian casualties in Syria to which incidentally, whether deliberately or not, it has made a major contribution.   I am assuming that in light of Trump’s aforementioned statements, this action was likely as much a [here’s how big my Johnson is] message directed at the Russians and the dems/media [who have accused him of being pro Russian] as the Syrians.  The question now is, how will the Russians [and Iranians, another big Assad supporter] react? 

                  Ron Paul’ thoughts (short):

(2)   President XI arrived yesterday to spend the weekend with Trump.  Following the recent missile shots by the North Koreans who are a client state of the Chinese, that is apt to be a major discussion point.  To be sure the Koreans are a whacky lot and highly unpredictable, making them also a dangerous lot.   I have no clue how this plays out but it is a volatile situation that carries risk.

Bottom line: as I noted above, it seems that both bulls and bears are choosing to interpret economic as well as political events within the prism of their own bullish/bearish perspective; and at the moment, they seemed to be pretty evenly divided in terms of buying/selling power.  Figuring out what breaks this psychological standoff is over my paygrade.  Whichever way prices break, in my opinion, the most powerfully overwhelming consideration in determining the magnitude of any directional move is the extent of the current overvaluation of equities.

            Other problems with our healthcare system as it currently exists (short):

            The latest from Doug Kass (medium):

            For the bulls (short):

       Investing for Survival
            Myths in investing #9.

    News on Stocks in Our Portfolios

   This Week’s Data

            Year over year retail chain store sales were lower in March than in February.

            March nonfarm payrolls grew by 98,000 versus estimates of 170,000.


            Head of National Economic Council supports bringing back Glass Steagal (medium):

                OPEC’s number 2 plans major increase in production (medium):



GOP triggers nuclear option (medium):

  International War Against Radical Islam

            Congress imposes new sanctions on Iran (medium):

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