FROM THE LEI WEBPAGE: "The Conference Board Leading Economic Index® (LEI) for the U.S. increased 0.4 percent in July to 95.8 (2004 = 100), following a 0.4 percent decline in June, and a 0.3 percent increase in May....
…The LEI’s six-month
growth rate seems to be stabilizing, pointing to a continuing but slow
expansion in economic activity for the rest of the year...”
“About The Conference Board Leading Economic Index® (LEI) for the U.S.
The composite economic indexes are the key elements in an analytic system designed to signal peaks and troughs in the business cycle.”
“The ten components of The Conference Board Leading Economic Index® for the U.S. include:
Average weekly hours, manufacturing
Average weekly initial claims for unemployment insurance
Manufacturers’ new orders, consumer goods and materials
ISM Index of New Orders
Manufacturers' new orders, nondefense capital goods excluding aircraft orders
Building permits, new private housing units
Stock prices, 500 common stocks
Leading Credit Index™
Interest rate spread, 10-year Treasury bonds less federal funds
Average consumer expectations for business conditions”
For more information, see…“About The Conference Board Leading Economic Index® (LEI) for the U.S.
The composite economic indexes are the key elements in an analytic system designed to signal peaks and troughs in the business cycle.”
“The ten components of The Conference Board Leading Economic Index® for the U.S. include:
Average weekly hours, manufacturing
Average weekly initial claims for unemployment insurance
Manufacturers’ new orders, consumer goods and materials
ISM Index of New Orders
Manufacturers' new orders, nondefense capital goods excluding aircraft orders
Building permits, new private housing units
Stock prices, 500 common stocks
Leading Credit Index™
Interest rate spread, 10-year Treasury bonds less federal funds
Average consumer expectations for business conditions”
http://www.conference-board.org/data/bcicountry.cfm?cid=1
LEI data, although it is
“leading”, is essentially a month behind, because it is based on analysis of
July data. It does give some perspective since many were suggesting a tanking economy in July. LEI is not calling for a recession.
Some are. The LEI analysis is opposite that of the
Economic Research Cycle Institute (ECRI). ECRI says the US is already in recession and
below is a chart from Contrary Investor.
These folks usually take the opposite side of the trend too so, as expected
they present a cautious view at this point.
Chart from…
http://www.contraryinvestor.com/mo.htm
While the above chart
looks problematic since the rate of change in growth is falling, the chart of
Durable Goods Orders doesn’t look particularly threatening and has actually
turned up. The Fed data was updated 31
August and appears to include additional data not reflected in the Contrary
Investor chart.
MARKET
RECAP
Tuesday the S&P 500
finished UP 0.3% to 1434 (rounded). VIX rose
another 0.8% to 16.41. (The Options Boys remain unconvinced about this rally.)
NTSM & MARKET ANALYSIS
The
NTSM analysis remained to HOLD Tuesday.
The value of the NTSM VIX indicator
is at a point that has marked a stock market top and the start of a correction the
last 5-times it has been at these levels; however, the value is not the most
important part of the indicator. The
direction of the indicator is critical.
The direction is now essentially flat. This indicator will switch to sell if VIX
climbs fast enough.
Market Internals of
new-highs/new-lows and breadth (%-advancing) are giving a neutral reading
now. That’s an improvement from the past
week or so, but I want to see them positive before I commit any more money to
stocks.
I think we are less than a
month away from the start of a correction.
That is guesswork, though; there is nothing in the NTSM analysis that
predicts the future. Remember: Trade
what you see; not what you think!
MY INVESTED POSITION
Based on the BUY signal, 6
July, I moved back into the market on 9 July (after the weekend) at S&P 500
1352. I currently have a 50% stock allocation overall. For my age, that is what most advisors recommend as a fully invested position, however, I am normally much more aggressive. I have less invested in stocks now because there’s a lot of risk.
