Category: Commentary
Philadelphia Federal Reserve Manufacturing Index Unexpectedly Enters Negative Territory
The Philadelphia Federal Reserve reported that its manufacturing diffusion index declined to -5.8 in May from 8.5 in April, well below consensus expectations for a slight increase to 10.0.Firms responding to the May Business Outlook Survey indicated that manufacturing growth fell back from the pace of recent months. The survey’s broad indicators for general activity [...]
Stock Market Correction Gains Momentum
The S&P 500 index closed sharply lower today, moving down to a new low for the overbought correction from early April below congestion support in the 1,315 area. Technical indicators remain extremely bearish overall, strongly favoring a continuation of the decline. However, the retracement is moving lower at an unsustainable rate and it will likely [...]
US Dollar Rally Returns to Previous High
In early May, we noted that the US dollar index had entered an important short-term cycle that could have a meaningful impact on long-term direction. Since then, the dollar has moved sharply higher, approaching previous highs of the rally from August 2011. During the last four months, the overbought correction from January has developed into [...]
Stocks Continue to Track Bearish Short-term Scenario
The S&P 500 index closed sharply lower today, moving down to a new low for the downtrend from early April below congestion support in the 1,345 area. The overbought correction has now retraced all of the gains from early February. With respect to cycle analysis, the stock market continues to track the bearish short-term scenario [...]
ECRI Reaffirms Recession Call Again
Last week, Lakshman Achuthan of the Economic Cycle Research Institute (ECRI) made the rounds on financial television once again to discuss the current state of their recession call from late last year. Achuthan reaffirmed their belief that a return to economic contraction is likely in 2012, noting that the coincident data used to officially define [...]
Gold Follows GCI Below Bull Market Support
Earlier this week, we noted that gold had moved below support at the lower boundary of the cyclical bull market from 2008. On Friday, gold closed near weekly lows, confirming the break below cyclical uptrend support and moving slightly below congestion support in the 1,600 area. The cyclical breakdown is a meaningful bearish signal that [...]
Stocks Attempt to Form Short-term Low
The S&P 500 index rebounded from large early losses for a second straight session, moving down to a marginal new low for the overbought correction from April. The development of two consecutive hammer candlesticks on the daily chart indicates that the stock market is attempting to form a short-term low in this area. With respect [...]
Coincident Data Trend Starts to Roll Over
Although it is still early in the development of this potential economic inflection point, the trend in coincident data has been rolling over during the last several weeks, as we anticipated it would in early March. In his latest weekly commentary, fund manager John Hussman updated his observed composite and extracted signal, noting that the [...]
Stock Market Behavior Signals Caution
The pattern of consensus expectation misses that we anticipated in March continues to develop as expected. On Thursday, the ISM non-manufacturing index for April was reported at 53.5, well below consensus expectations of 56. On Friday, the increase in April nonfarm payrolls was reported at 115,000, well below consensus expectations for an increase of 165,000. [...]
Recent Stock Market Plunge was Highly Likely
During the last three weeks, the S&P 500 index has declined 8.5 percent, retracing all of the gains since the middle of January.As usual, the violent drop was unforeseen by the consensus view. In March, the vast majority of mainstream analysts projected additional gains for stocks using common forecasting methodologies that rely on the Fed [...]
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