http://advisorperspectives.com/dshort/updates/ISM-Manufacturing.php
From Briefing .com: “This [the ISM Manufacturing Index] is a highly overrated index.
It is merely a survey of
purchasing managers. It is a diffusion index, which means that it reflects the
number of people saying conditions are better compared to the number saying
conditions are worse. It does not weight for size of the firm, or for the
degree of better/worse. It can therefore underestimate conditions if there is a
great deal of strength in a few firms. The data have thus not been either a
good forecasting tool or a good read on current conditions during this business
cycle. It must be recognized that the index is not hard data of any kind, but
simply a survey that provides broad indications of trends.” http://www.briefing.com/Investor/Calendars/Economic/Releases/napm.htm
So perhaps I shouldn’t pay
as much attention to the PMI reports.
John Hussman, PhD, doesn’t and here is an excerpt from his most recent weekly
commentary from Hussman funds…
“The ISM purchasing
managers data came in slightly above expectations, but broader data from
regional ISM surveys as well as Federal Reserve surveys remain well
below-average. European purchasing manager’s data has been dismal. As Markit
notes, “It seems inevitable that the region will have fallen back into
recession in the third quarter.” And even if we take the recent employment
report at face value, the year-over-year growth in non-farm payrolls is
presently just 1.37%, and we’ve never yet seen a decline in payroll growth
below 1.4% year-over-year except during or just prior to U.S. recessions. This
time may be different, but is difficult to see why that expectation is sensible
given the broader context of economic evidence.” - John Hussman, PhD. For the
complete Weekly Market Comment see... http://www.hussmanfunds.com/
John Hussman is still
calling for recession, so I’ll look once again at our recession indicator.
The NTSM recession
indicator compares the Morgan Stanley Cyclical Index to the S&P 500. Over the last month the Cyclical Index has
gone down slightly compared to the S&P 500 but not enough to give a clear
indication. About 3-weeks ago this
indicator was saying “no-recession”. The
NTSM recession indicator is currently neutral so investors haven't agreed that recession is on the horizon...at least not yet.
MARKET
RECAP
Monday the S&P 500
finished down 0.35% to 1456 (rounded).
VIX rose about 5% to 15.11.
NTSM
The
NTSM analysis remained HOLD Monday.
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.
