The Morning Call
1/9/18
The
Market
Technical
The indices
(DJIA 25283, S&P 2747) had a mixed day (Dow down, S&P up)---a pause
that is not surprising given the recent strong pin action. Volume remained high
and breadth strong. Long term, they
remain strong viz a viz their moving averages and uptrends across all
timeframes. Short term, they are above the resistance level marked by their
August highs, meaning that there is no resistance between current price levels
and the upper boundaries of the Averages long term uptrends. The technical
assumption has to be that stocks are going higher.
The other
indicators (VIX, TLT, UUP, GLD) are not trading like the economy is strengthening/interest
rates are rising; but there is some inconsistency in their pin action.
I remain
uncomfortable with the overall technical picture.
Everything
is overbought (short):
Fundamental
Headlines
Two
developments this week that bear watching:
(1)
fourth quarter earnings reporting season begins. I thinks the odds are high that it will be
generally upbeat; and given the current euphoric investor psychology, any bad
news will likely overlooked. In short,
it will probably add fuel to the current market moon shot,
(2)
the Donald is out vowing to impose tariffs on China,
Mexico and anyone else in his sights. I
have long made the point that free trade is a significant source of economic growth
not just for the US but for our trading partners. Granted trading arrangements need to be
revised on a periodic basis as economic circumstances change (NAFTA). In addition, when there is blatant thievery
going on (Chinese pilfering of our intellectual property) stern action is
required; certainly more than was forthcoming in prior administrations. My concern here is the balance and, as usual,
it is tough to gauge when Trump uses his ‘art of the deal’ rhetoric. Hopefully, that is all that it is happening and
the US can make the proper adjustments without causing some kind of trade war. Because if it is more than that, then even my
economic growth forecasts may turn out to be optimistic. I remind you that the Smoot Hawley Act in the
late 1920’s was a primary contributor to the depression.
Investing for Survival
When to sell.
Stock
allocations approaching dotcom levels (medium):
Bob Farrell’s 10 rules
(medium):
Everyone
knows pension plans are screwed (medium):
Economics
This Week’s Data
US
November
consumer credit grew $28 billion versus expectations of up $18 billion.
The
December small business optimism index came in at 104.9 versus forecasts of
107.9.
International
November German
factory orders fell 0.4%.
***overnight,
Japan reduced the size of its bond purchase program (the beginning of the end
of Japanese QE?), China lowered its support of the yuan and November German
industrial production rose 3.4% versus estimates of up 1.7%.
Other
Update
on big four economic indicators (medium):
EU
economic confidence at two decade high (medium):
Update
on lumber prices (short):
Five oil market
myths (medium):
What
else I am reading today
Five
ways to invest in this hot market (beware of his last recommendation):
https://www.marketwatch.com/story/5-opportunistic-ways-to-beat-the-stock-market-this-year-2018-01-06
The fatal mistake crypto
currency investors are making (medium and a must read):
What we need is a bigger
f**k it bucket (medium):
The
Michelangelo sculpture that was sold for scrap (medium):
Progress in Korea
(medium):
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