The Commerce Department reported
that consumer spending fell 0.2 percent, the first decline since September 2009.
After the ISM and GDP data, add
poor consumer spending and today is what you get. The market is trying to digest all this bad
data and revalue stocks.
I believe that high Government
debt brings about reduced consumer spending.
First, the Government is running up huge debts that you will have to
pay (eventually) thru higher taxes.
Given that news, would you be inclined to spend-spend-spend? Not me. Not rich people either – they are saving it
for their children.
Second, since the Government now accounts
for 25% of GDP (compared to 18% during Clinton’s term when he balanced the
budget) the Government is itself sucking up a greater part of the capital of
our country and spending it less efficiently than the free enterprise system
that this country was founded upon.
Today, we tested the 16 March low
of 1256 on the S&P. Both volume and
market internals were worse today, so it was a failed test. We’ll have to wait for a successful test
before we can declare the correction over.
It is possible that we have seen the top for this cycle of the cyclical
Bull market within the secular Bear trend.
The chart looks ugly – we were unable to break thru to higher territory
and now we seem to be headed down. Time
wise, we are due for the end. If that’s
the case, we would expect a 25 to 50% drop in the S&P 500.
The Navigate the Stock Market
analysis was SELL today and the trends in all indicators got worse.
I sold last week on an earlier
signal from NTSM. I am defensively
positioned with only 30% invested in stocks.
