The Economic
Populist (excerpt)
“ISM Manufacturing
Contracts for 3rd Month in a Row - PMI 49.6% for August 2012
The August 2012 ISM
Manufacturing Survey PMI decreased, -0.2 percentage
points, to 49.6% and is in contraction for the 3rd month in a row. In July 2009
the PMI registered 49%. Shrinkage is the
theme of August's ISM manufacturing survey as the shadows of 2009 infiltrate
this report....New Orders
decreased -0.9 percentage points, to 47.1%. New Orders inflection point, where
expansion turns into contraction, is not 50, it is 52.3%.” Full story at…http://www.economicpopulist.org/content/ism-manufacturing-contracts-3rd-month-row-pmi-496-august-2012
NEW YORK (CNNMoney) – “Consumer
confidence tumbled in August, with the latest reading indicating the most pessimism so far this year.”
“The closely watched index from The Conference Board, a leading business research firm, fell to 60.6 from 65.4 in July. It's the worst reading since November, and was driven down by growing concerns over the job market, as well as the outlook for business conditions over the next six months.” Full story at…
http://money.cnn.com/2012/08/28/news/economy/consumer-confidence/index.html?iid=EL
“The closely watched index from The Conference Board, a leading business research firm, fell to 60.6 from 65.4 in July. It's the worst reading since November, and was driven down by growing concerns over the job market, as well as the outlook for business conditions over the next six months.” Full story at…
http://money.cnn.com/2012/08/28/news/economy/consumer-confidence/index.html?iid=EL
My comment: It is
disconcerting to see Consumer Confidence falling since the stock market has
been rising. Usually Consumer Confidence follows the stock market. Consumers are getting spooked over something.
(?)
It wasn’t all bad news:
WSJ reported August auto sales were up over 20% in August when compared to last
August.
MARKET RECAP
Wednesday the S&P 500
finished DOWN 1-1/2 pts to 1403 (rounded).
VIX fell about 1% to 17.74.
NTSM
The NTSM analysis remained
HOLD Wednesday.
Here’s a broken record
report, because I’ve already reported this trend recently; but I think it’s
important. Breadth (percentage of stocks
advancing) is trending down while the S&P 500 has been nearly stationary
for the past 3-weeks. The Smart Money
Index isn’t looking good either because the pros are selling in the last hour
of the day and that trend has been going on (generally) since mid-July. My new-hi/new-lo analysis peaked out about a
week ago at the S&P 500 high. (That indicator looks at the number of new
highs in stocks vs. the number of new lows and that is a market internal metric.)
The Morgan Stanley Cyclical Index has been going up for the past 3-weeks (a good sign) when compared to the S&P 500, but that trend has stopped recently and it has flattened out. Investors have renewed concerns about recession, but seem to be waiting for more data.
So you might ask, with all
of those negatives, why am I not selling stocks? The answer is that those metrics, while
useful, don’t give very precise sell or buy signals and they may switch back
the other way. They do point to a very
uncertain future and unless those trends reverse soon, the S&P 500 should
see a decline. Last year Breadth topped
out about a month before the top preceding a correction. This time breadth topped out about 2-weeks
ago, but so did the S&P.
So repeating (again…speaking
of redundant!) I use the NTSM analysis for determining buy/sell points. The
NTSM is neutral today at the close.
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 now have a 50% stock
allocation overall. For my age, that is
what most advisors recommend, however, I am normally much more aggressive. I have less invested in stocks now because
there’s a lot of risk.
