Thursday, March 31, 2016

Unemployment Claims … Chicago PMI … Peaking Corporate Earnings … Stock Market Analysis

“The number of applications for unemployment benefits in the U.S. climbed last week to a two-month high, a sign of more moderate labor market progress. Initial jobless claims increased by 11,000 to 276,000 in the week ended March 26…” Story at…
CHICAGO PMI (Advisor Perspectives)
“Chief Economist of MNI Indicators Philip Uglow said, "’The most significant result from the March survey is the pick-up in the Employment component which has remained weak for much of the past year. Looking through some of the recent volatility, the data are consistent with steady, not spectacular, economic growth in the US.’" Commentary and charts at…
“…corporate earnings are one of the most popular ways to value equities thus the sustainability of record-high profit margins should be an issue of great concern to investors. If profit margins revert to historical averages, earnings-based valuation measures investors are using to justify investment in equities today could quickly go against them making stocks appear much more expensive than they do currently. And this process may now be underway.” Commentary at…
I’ll have to skip the analysis today – it’s a busy one.  As of 3PM Thursday the S&P 500 was dropping and volatility (VIX) was increasing.  The long-term NTSM signal remained BUY; short term indicators, Money Trend and the Breadth-Index Top Indicator, are suggesting a pull-back now.
My separate Market Internal indicator is positive on the markets as of 3PM, but that might switch to neutral if the market continues down.  This indicator is slow to react and tends to be more of a follower.
Overall I remain bearish in the near-term and long-term, at least until we get news that would change the long-term view.  Company earnings will be the big test.