As a way of exposing to the general public some of the information we provide to our subscribers, we will be posting material updates from a few months in the past here in our blog area. There are two reasons for this. First, to show you the level of detail available to subscribers, and second, to provide a little demonstration about the accuracy of our information. Below, you will find our update from April, 2015, just four months ago.
Please comment along with us, and let us know if you feel that the update materials have met your own standards for reliability. And remember, if you would like to see our current updates, we would be happy to have you as a subscriber. Thank you! - AP
April 2015: The Fed has not yet published its Leading Economic Indicators for January 1 yet, and they are typically later on their last quarter of the year analysis. However, the Conference Board set of LEI's has been reported in a timely fashion, and continues to rise at a modest pace, so we don't expect there to be any negative surprises in the FED versions when they do come out later this month. The CPI rose a tiny bit in February. From February 2014 to 2015, it is dead flat, at 234.7. Money supply jumped a bit more, and is up $250B in just the past three months, still indicative of accommodation by the Fed. We maintain our views regarding the international economic and currency drivers as being cautions against Fed upward interest rate moves in the next few months, even though the current chatter is for rates to start lifting off the floor in June. There is more open discourse about this from the individual Fed governors, but a consensus among them is more likely to take place in the third quarter, in our view. Leading economic indicators and US employment levels are still encouraging, There are projections for this earnings season in the stock markets to show a year over year slight decline in earnings. There are still a few more reasons to retain current rate policies than there are to raise rates, especially with CPI inflation at zero! In terms of stock market activity, during March, the indices are pulled back from flirting with "cautionary" territory on the upward side, and then slowly climbed back up, which is just the kind of digestion that occurs before upward moves to new highs. Counterbalancing that potential, May thru July is usually the annual doldrums period, summarized in the trader's bible as "Sell in May and go away" i.e. take a vacation. That is not our approach, as we are in while the overall economic picture remains positive, and that is certainly still the case. The NASDAQ has taken 15 years and endured two recessions to return to its previous historical highs, in "5000" territory. This month, as we monitor both downside activity and upside activity for our AP-SI indicator, the markets are in historically high territory. If there are any unexpected and sudden upward moves into our caution or warning territories, they will show up in the AP-SI indicator. You can "follow along" between our April and May updates: the cautionary level by May 1 would be for the S&P500 to be holding above 2194 at the time of our next report. Right now, it is about 90 points (about 4.2%) below that level. That is enough headroom to not be terribly concerned at this time. Past experience shows the market can become seriously overbought and crash when it exceeds our warning level, which is well over 2500 for the S&P at this time. In our opinion, the stock markets, as measured by all the major indices, are in "warm" territory, but not dangerously overheated, despite what you may be reading or hearing in much of the financial media. There is still way too much fear built into the economy to consider that any bubbles have formed. The one counter-balancing fact is that margined purchases in the stock markets are once again at all-time highs. A sudden downdraft return-to-the-mean movement (S&P500 back to 1800) to clear out this kind of speculative excess can occur, but is likely to be short-lived, less than four months in duration.