...the Dow transports is thought by
many to be a leading economic indicator — on the theory that companies in the
transportation sector are a particularly sensitive barometer to how the
economic winds are blowing. So weakness, even if it’s just relative weakness,
could be hinting at bigger problems down the road...
...for that reason (Richard Russell,
editor of Dow Theory Letters) is largely out of the stock market." Full story at...
As I noted Monday the NTSM version
of this type of advance warning is the Morgan Stanley Cyclical Index. It continues to outperform the S&P so I
am confident that this market has further to go. On the other hand, a lagging transportation
average is cause for concern on a longer term basis. If the MS Cyclical index begins to lag too,
then we’ll know that the market is pricing in possible recession.
ANOTHER WARNING SIGN?
Here’s another early warning caution:
The Index of global shipping, Baltic Dry fell to a 25-year-low recently. As reported by The Guardian economics Team, “The reason (many) used to study the
Baltic Dry was because it measured dry freight costs, priced in dollars, as
reported daily by brokers to London's Baltic Exchange. Prices for shipping
coal, rice, wheat and other commodities were seen as a proxy for the strength
of world trade and, by extension, of activity in the global economy. A falling
Baltic Dry suggested that shipowners were cutting prices in the face of falling
demand. In recent days, the Baltic Dry has fallen to a 25-year-low prompting
concern that history is about to repeat itself.”
Don’t panic yet
though. The shippers built many more ships in
the past several years (even they didn’t predict the recession) and that has
driven the price of shipping down so this indicator may not be very good at this
point. Full story at…http://www.guardian.co.uk/business/economics-blog/2012/feb/07/baltic-dry-shipping-index-25-year-low
ANOTHER
ECONOMIST’S VIEW
Irwin Kellner, MarketWatch's chief economist,
said in his blog today that he is optimistic on the economy, but he pointed out
an interesting statistic that I offer simply as an item for thought: “... while the U.S. actually produces more goods and
services today than it did before the recession began in 2007, it is doing so
with about six million fewer workers. “ Full story at...http://www.marketwatch.com/story/is-glass-half-empty-or-half-full-2012-02-07?link=home_carousel
Well,
enough! The Navigate the Stock
Market system is still positive at the close Wednesday.
NTSM
analysis remains BUY.
I
bought back into the stock market at S&P 500, 1155 on 7 Oct after the 6 Oct
NTSM buy signal. I remain 100% long in
the long term portfolio (100% stocks in the 401k.). (See the page “How to Use
the NTSM System” – the link is on the right side of this page).
