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The Morning Call--T'is The Season To Be Jolly

The Morning Call

12/12/17

The Market

    Technical

 

            The indices (DJIA 24386, S&P 2659) had a good day, though volume was flat and breadth was mixed.  The bottom line remains that both of the Averages continue to trade above their 100 and 200 day moving averages and are in uptrends across all time frames---with the assumption being that stock prices are going higher.

The VIX (9.3) fell 2 ½ %, closing below the lower boundary of its long term trading range for a second day, below its 100 and 200 day moving averages (both resistance).  It is again nearing its July low (8.8) 

            Has Global Stock Market Volatility Bottomed? - See It Market

The long Treasury was down fractionally, ending above its 100 and 200 day moving averages and the lower boundaries of a very short term uptrend, its short term trading range and long term uptrend.   So bond investors still don’t appear to be concerned about a Fed rate hike later this week.

 

The dollar was unchanged, above its 100 day moving average (now support), right on the upper boundary of a very short term downtrend but below its 200 day moving average (now resistance).

 

            Gold was down ½ %, continuing its poor performance.  It is below its 100 and 200 day moving averages and reset its short term trend from up to a trading range.  GLD investors are apparently more concerned about a rate rise than the bond guys. 

            Is Bitcoin Really Stealing Demand For Gold? Here Is Goldman's Answer

Bottom line: long term, the indices 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.  If you own enough cash to sleep at night, lay back and enjoy it.

Trading in UUP, GLD and TLT are back out of sync with themselves (sluggish economy, weak interest rates) and with the VIX and stocks.  I remain confused and uncomfortable with the overall technical picture.

    Fundamental

 

       Headlines

 

            Yesterday was quiet on most fronts: no economic data in the US or abroad.  Investors spent the day (1) getting jiggy with bitcoin, (2) anticipating a grand exit by Yellen on Wednesday and (3) ignoring more accusations of sexual harassment by Trump.  No wonder stocks were up.

 

            I have linked below to a number of articles on relevant issues: bit coin, Brexit, a slowdown in volume of containerized shipping.

 

            This from two big supporters of tax reform (medium):

            Republicans' tax plan takes a quirky swipe at the little guys

 

            Bottom line: animal spirits are high partly as a function of the seasonal bias and partly in anticipation of upbeat news on tax reform and infrastructure spending.  The question is, assuming the successful passage of both, what will be the impact on corporate earnings and how those earnings are valued?  In my opinion, the most optimistic investment scenario possible is more than adequately reflected at current price levels.  Be careful.

            The "Exit" Problem

 

       Investing for Survival

   

            Three unexpected retirement costs.

            3 unexpected retirement costs that can shake up your finances

 

    News on Stocks in Our Portfolios

Economics

   This Week’s Data

            The November small business optimism index came in at 107.5 versus expectations of 104.4.

            NFIB: Small Business Optimism Index "Near All-Time High" in November

            November PPI was up 0.4% versus estimates of up 0.3%; ex food and energy, it was up 0.3% versus forecasts of up 0.2%.

   Other

            Is softness in the global containerized shipping market a warning sign? (medium):

            Warning From The World's Biggest Shipping Line On Outlook for World Trade

            The math of unwinding the Fed’s balance sheet (medium):

            Abracadabra - Uncovering The Fed's 'Magnificent Fraud'

            Some analysis of the Brexit ‘break through’ (medium):

            David Davis Points Out Brexit "Breakthrough" Isn't Binding as Draft European Council Statement Tightens the Screws | naked capitalism

            China’s plan to combat US tax reform (medium):

            China Unveils Plan To Combat Trump Tax Reform: "We'll Have Tough Battles"

            Is the World Trade Organization worth effective? (medium):

            The WTO: Useless For Trade, Useful For The State

            Today’s bitcoin entries:

            Elasticity of Money is a Feature, not a Bug - Pragmatic Capitalism

            Coinbase Breaks: "Buys, Sells Temporarily Disabled"

                "It's In The Mania Phase": Securities Regulator Warns That "Mortgages Are Being Taken Out To Buy Bitcoin"

Politics

  Domestic

  International War Against Radical Islam

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