The Morning Call
6/21/17
The
Market
Technical
The indices
(DJIA 21467, S&P 24373) fell back yesterday, but not enough to close Monday’s
gap open. So we could see more weakness
short term. Nevertheless, they retain their
upward momentum as defined by their 100 and 200 day moving averages and
uptrends across all timeframes. At the
moment, I see nothing, technically speaking, to inhibit the Averages’ challenge
of the upper boundaries of their long term uptrends---now circa 24198/2763. Volume rose slightly but breadth weakened.
The VIX (10.9) was
up 4 ¾ %, but remained between the lower boundaries of its intermediate and
long term trading ranges on the downside and its 100 and 200 day moving
averages on the upside.
The long
Treasury spiked 1%, finished above its 100 and 200 day moving averages (now
support) and in a short term trading range---continuing to reflect bond
investors’ doubts about a strong economy/rising inflation.
The dollar was up
but still ended in a very short term downtrend and below its 100 and 200 day
moving averages.
GLD was down
again, closing below the upper boundary of its short term trading range and its
100 day moving average (if it remains there through the close today, it will
revert to resistance) and right on its 200 day moving average. This chart keeps getting uglier.
Bottom line: a
short term retreat is not unexpected, given the need to fill Monday’s gap
open. However, there seems little reason
to be concerned about the long term, technically speaking, except for the
troublesome decline in Treasury rates and the flattening yield curve.
Yesterday
in charts (short):
Fundamental
Headlines
Two
minor datapoints yesterday: the first quarter US trade deficit was less than
forecast and the growth of month to date retail chain store sales rose from the
prior week.
Overseas,
the news was not quite so positive: BOE chief said that now it is not the time
to raise rates; Chinese yield curve inverts.
***overnight,
the BOE is taking a page from the Fed’s playbook (on the one hand, on the other
hand) as its chief economists says that it is time to raise rates.
And
China attempts to un-invert its bond yield curve,
The
only other mentionable item is the continuing fall in oil prices. Given history, I can’t believe that people
bought into the OPEC production cut/higher oil prices thesis in the first place;
and perhaps that thesis will prevail.
But at the moment, it is suffering some severe heartburn. Plus, it still belies the notion of lower
oil prices = unmitigated positive.
Bottom line:
aside from the news of Amazon buying Whole Foods and its new ‘try before you
buy’ concept which have the Market all atwitter, the economic and political
news flow is not what I would call upbeat---particularly the geopolitical
goings on in the Middle East and North Korea.
I have said this before; but at some point, bad news will be bad news. Clearly, I have no idea when.
My thought for the
day: I know lots of investors who spend hours doing their homework; then
instead of following their work, they chase ideas/tips from friends or brokers. I probably don’t have to tell you which
investments were the bigger winners.
Investing for Survival
Bogle’s
seven tips for investors.
News on Stocks in Our Portfolios
Economics
This Week’s Data
Month
to date retail chain store sales grew faster than in the prior week.
Weekly
mortgage applications rose 0.6% while purchase applications fell 1.0%.
Other
One
calculation of the odds of a recession (short):
Another
sanguine look at the economy (medium):
Citi
on Fed policy (medium):
More
on the pension underfunding problem (short):
And
speaking of underfunding, Illinois is at the edge of crisis (medium):
Politics
Domestic
International War Against Radical
Islam
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for Survival’s website (http://investingforsurvival.com/home)
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