In only 10 days, the NFL regular season begins. Teams and coaches will be analyzing each other’s moves and plays, looking for any indication that can give them an edge to succeed. Some will play strong offense, others good defense from the moment of the first kickoff. Although some big plays could happen during the first kickoff or first hike, we know this is only the start of the game, and in turn only the start of the season. History suggests the same is true for the first Federal Reserve (Fed) interest rate hike as it relates to the stock market and economy. While football teams are looking for an edge against their opponents on the field, investors will be keeping a close eye on the Fed to try and gain an edge as to when it will finish winding down its bond-buying program (quantitative easing 3) and eventually begin hiking short-term interest rates. Investors appear to be comfortable with the end of quantitative easing following…
Since the dawn of financial markets, investors have been searching for signals of impending declines. Many economic indicators correlate highlywith the stock market, which means they are coincident and not leading,
and they tend to move at the same time as stocks. Some are lagging, meaning they move after stocks, which of course is not very predictive. An important goal for all investors is to find leading indicators in an attempt to
anticipate big down moves. One leading indicator that we have found with reliable predictive power is the Conference Board Index of Leading Economic Indicators (LEI). Itis always difficult to predict small stock market
pullbacks, such as the two 4 – 6% drops that the S&P 500 Index has experienced in 2014. Such pullbacks can be driven….
Volume has picked up during the recent downturn. No, we are not talking about trading volumes; we are talking about the volume from your TVs with talking heads warning about an impending stock market downturn. If you turn off the TV and focus on what the market is telling you, rather than the talking heads, you can tune out the noise. The way we listen to the market in our investment process is through technical analysis, where we assess the behavior of the market and its underlying drivers. Analyzing market breadth has been an especially useful technical analysis tool for predicting recessions and bear markets. There are various ways to look at market breadth, and we will be looking at two critical areas in this week’s commentary. Market breadth can be tracked by looking at the number of stocks that…
Recently, we wrote about the potential disconnect between the weak performance of the economy as measured by gross domestic product (GDP) in the first quarter of 2014 and the run of strong economic data
for April, May, and June 2014. On balance, the economic data release in recent weeks for July 2014 continued to meet or exceed analysts’ expectations, including data released last week (July 28 – August 1, 2014)
on second quarter GDP, July employment, and the July readings on the Institute for Supply Management’s (ISM) manufacturing survey and vehicle sales. In this week’s commentary, we’ll examine whether or not a reconnect
has occurred and also revisit Federal Reserve (Fed) Chair Yellen’s labor market dashboard in the wake of the release of the July 2014 Employment….