The Conference Board reported that
the Leading Economic Index® (LEI) for the U.S. increased 0.3 percent in August. That followed a 0.6 percent increase in July
and a 0.3 percent increase in June.
Ataman Ozyildirim, economist at The
Conference Board, said “The August increase in the U.S. LEI was driven by
components measuring financial and monetary conditions which offset
substantially weaker components measuring expectations. The growth trend in the
LEI has moderated and positive and negative contributors to the index have been
roughly balanced. The leading indicators point to rising risks and volatility,
and increasing concerns about the health of the expansion.”
So
we have rising concerns, but no smoking gun on a potential recession. That’s pretty much what the Fed said in their
statement.
Nike
reported great results yesterday, hardly indicative of recession. Do people buy tennis shoes in recessions?
Breadth
values (advancing issues vs. declining issues) are again as low as they were at
the 2009 bottom and at the July 2010 bottom when fewer stocks were advancing. As a result, I upped my stock holdings in the
trading portfolio to about 50%.
Because
of breadth, 1120 is looking more like a bottom at this point. The S&P 500 hasn’t broken below the 1120
area on several tries, and breadth has been so low at the 8 August and 22
September bottom it doesn’t seem like the S&P can go much lower.
As
I have mentioned before, I still want to see a successful re-test of the 1120
level. Perhaps next time the S&P 500
visits 1120 we’ll get a buy signal.
This
is all technical analysis. News can trump technicals so if the news is bad – we
will move down and probably break well below the 1120 area.
Today,
Friday, the Navigate the Stock Market analysis was SELL. The NTMS analysis probably won’t switch to
Buy until the VIX drops significantly.
I sold on the 27 July sell signal at S&P 500 1301 and I am
defensively positioned with only a small amount of my portfolio invested in
stocks. (Zero stocks in the 401k.) (See the page “How to
Use the NTSM System” – the link is on the right side of this page).
I
am about 50% long in the trading portfolio.
