3/16 Morningline

This morning's trading focused on the value of money, not unexpectedly, with the FOMC meeting today and the rating agency Moody's having raised the possibility of lowering U.S. debt below AAA.
The value-haven gold (GLD) gapped up to 1.6% above Monday's close, moving above the 20-day moving average for the first time in four trading days. This shows a lack of confidence in the dollar's value.

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Abbreviations 

psar - Parabolic Stop and Reverse, adx - Average Directional Index, pps - Person's Proprietary Signal, ma20 - 20-day moving average, macd - Moving Average Convergence-Divergence, mfi - Money Flow Index, sto - Fast Stochastic

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The metal is showing a pps bull signal; the psar and macd remain in bear territory, although the macd this morning began rising toward the zero line. The sto moved from oversold to neutral, a bullish sign.

With weakening trending (the adx is 11), signals on GLD are prone to whipsaw at this time.

Oil (USO), denominated in dollars globally, also moved back above the ma20, trading above Monday's high in a narrow range, also showing an expectation that the dollar will weaken. The psar, pps and macd all showed bear signals, but the sto gave a bull signal by moving from oversold to neutral. The adx was at 18. The dollar declined in value against both the euro and the yen, although each is trading within the established range. Treasury long-term bonds (TLT), which move in part on the expectation of short-term rate levels, is trading at the upper end of a three-day range. A higher price indicates lower rates, which in turn indicate an expectation of low inflation, which generally is good for the value of the dollar.

New this week, from the author of Liar's Poker, a look inside the Doomsday Machine.

And, oh yes, blue-chip stocks. SPY is trading above yesterday's range, at $115.71, about 0.2% below the peak set three days ago. I expect a drifting session until 2:15 p.m. Eastern, when the FOMC makes its announcement.

To the numbers, at about 10:-5 a.m. Eastern . . .

Indicators:

• Blue chip stocks etf (SPY) is trading at $115.71, in psar bull mode with an adx of 23, entered at close on Feb. 11 (at $108.13)
• Fear index or volatility (VIX) 17.87, bear/10 (bullish for stocks), Feb. 17 (21.72)
• Treasury long bonds (TLT) $90.71, bear/11, March 10 ($89.59)
• Corporate junk bonds (JNK) $39.40, bull/27, Feb. 22 ($38.91) Pps bear signal on Monday.
• Emerging markets (EEM) $41.17, bull/18, Feb. 3 ($39.40)
• Gold (GLD) $110.11, bear/12, March 9 ($109.72) Pps bull signal.
• Oil (USO) $38.48, bear/18, March 12, ($39.51) A psar bull signal on Monday proved ephemeral; the indicator is back in bear mode

Forex currency pairs:

• Dollars per euro (EUR/USD) $1.3729, bull/23, March 3 ($1.3696)
• Yen per dollar (USD/JPY) ¥90.27, bull/13, March 10 (¥90.51)

Stock option holdings, March expiry:

• AKS, iron condor (p19/-p20/-c25/c26), $23.42, bull/13, March 3 ($22.81)
• WFC, iron condor (p26/-p27/-c29/c30), $29.79, bull/23, Feb. 22 ($28.01)

Zombies:

• MCO, long shares, $28.53, bull/15, March 5 ($28.11) 
• PALM, long shares, $5.62, bear/42, Feb. 18 ($9.62)
  

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