Updating each Saturday.
The PMI Manufacturing Index Flash is reporting sharp acceleration in activity this month, at a flash October index of 53.2 for a nearly 2 point gain from September and the strongest rate of growth since October last year. The PMI Services Flash is reporting a sharp upturn in business this month, with the headline index up nearly 3 points to 54.8 for the strongest rate of composite growth this year. New home sales in September, up 3.1 percent to a 593,000 annualized rate. The September durable goods report was flat, where orders slipped 0.1 percent. Initial jobless claims fell 3,000 in the October 22 week to 258,000 with the 4-week average up but only slightly, to 253,000. The consumer and the nation’s exports are the headliners in third-quarter GDP which topped expectations at an annualized 2.9 percent. The consumer sentiment index (U. of Michigan) weakened substantially in October, ending the month at a lower-than-expected 87.2.
Post Brexit, the UK pound has sunk like a rock, down 20% since June (huge in currency moves), so Apple has raised the price on their products by 20% (http://www.cnbc.com/2016/10/28/apple-pushes-up-prices-in-uk-by-20-percent-as-customers-feel-brexit-bite.html ). If this is followed by other companies, Britain will soon show big inflation as one result of the Brexit vote.
The Chinese economy is stable:
“China will focus on combating asset bubbles and preventing economic and financial risks while “continuing to moderately expand aggregate demand and push forward supply-side structural reform”, the top leaders said on Friday.
Economic growth has remained sound in the first three quarters, and much headway has been made in reducing excessive production capacity and lowering production costs, said a statement released after a meeting of the Political Bureau of the Communist Party of China Central Committee, presided over by General Secretary Xi Jinping.”
Globally, interest rates have begun to rise slowly:
“Sept 21, 2016 – Global interest rates jumped Friday to their highest level since the U.K.’s vote to leave the European Union, in a sharp global government-bond selloff sparked by hawkish comments from Federal Reserve officials and policy inaction by the European Central Bank.
The selling pushed the benchmark 10-year Treasury note to 1.675%, its highest level since June 23, the day of the Brexit vote, while the 10-year Germany bund yield turned positive for the first time since the Brexit vote. Yields rise as bond prices fall.
The sharp move vindicated analysts that had been warning investors not to get complacent during the recent global bond rally that inflated prices to their most expensive levels in history, pushing global yields to all-time lows, in many cases in negative territory.” http://www.marketwatch.com/story/these-investors-will-get-hit-hardest-as-global-interest-rates-rise-2016-09-09
The market has been weak for a few months, despite setting an all-time high just a couple of months ago. We’ve traded in a range from 2120 – 2190 and we remain in that range.
I bought in using SPY about 5 weeks ago and put a trailing stop loss % -3% order under that. I’m still in, and with the high water mark nature of the trailing stop loss %, my max loss is 1% now (since the market went higher after I bought).
Technically, RSI is at 40 and headed down, not a good sign. MACD has fallen to -5 and may head down. Nothing encouraging there, so I expect to be stopped out of my position next week. This does not offer a good buying position.
Earnings season has been slightly positive, with earnings up quarter over quarter by about 2%. This has not been enough to get stocks to rally, so one really has to wonder what the next catalyst will be?
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Rich Comeau, Rich Investing