Tracking the Market with Social Media Click to view

September 1st, 2014 Blair Jensen

The Trade Followers Momentum indicator for the S&P 500 Index (SPX) is positive, but showing some short term caution signs. Seven day momentum reached extremely overbought territory last week and has now turned over. Previous peaks of high magnitude have led short term tops in the market by roughly a week or two. The peaks are often associated with sideways or slightly upward action in SPX that ultimately ends with a short term drop in price. This is the first indication of caution; however, it doesn’t imply a large consolidation in price…yet.

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A Labor Day Perspective: The Growth of our Services Economy Click to view

September 1st, 2014 Doug Short

In honor of Labor Day, which was signed into law as a national holiday in 1894, I'd like to share some graphical snapshots of a major change in our nation's workforce over the decades.

The Department of Labor's Bureau of Labor Statistics has monthly data on employment by industry categories reaching back to 1939. The first chart below is an overlay of the compete series of employment numbers for the two major categories, manufacturing and services industries.

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World Markets Weekend Update: The Rally Moderates Click to view

August 31st, 2014 Doug Short

The broad rally of world indexes on my watch eased off the accelerator last week. Five of the eight posted gains, down from all eight for the two previous weeks. France's CAC 40 was the hands-down winner with a 3.02% advance, more than double the runner-up Eurozone neighboring index, Germany's DAX, which rose 1.40%. India's SENSEX joined the two English-speaking countries with modest gains of less than one percent. The two China indexes joined Japan's Nikkei as the week's losers.

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Weekly Market Summary Click to view

August 30th, 2014 Urban Carmel

The 2Q earnings season is over. Per Fact Set, earnings grew at 7.7% yoy and sales grew 4.5%. These are the strongest results in several years and, remarkably, they are coming when the bull market is already more than 5 years old.

The sales growth rate was particularly strong. Analysts had expected 3.7% in 2Q. The consensus forecast for 3Q and for the full-year are still for 3.7%; so, some moderation is expected.

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Vehicle Miles Driven: A Structural Change in Our Driving Behavior Click to view

August 30th, 2014 Doug Short

The Department of Transportation's Federal Highway Commission has released the latest report on Traffic Volume Trends, data through June.

Travel on all roads and streets changed by 1.4% (3.7 billion vehicle miles) for June 2014 as compared with June 2013. The less volatile 12-month moving average is up 0.13% month-over-month. If we factor in population growth, the 12-month MA of the civilian population-adjusted data (age 16-and-over) is up 0.06% month-over-month and down 0.1% year-over-year.

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Moving Averages: Month-End Update Click to view

August 30th, 2014 Doug Short

Valid until the market close on September 30, 2014

The S&P 500 closed August with a monthly gain of 3.77%. All three S&P 500 MAs and four of the five the Ivy Portfolio ETF MAs are signaling "Invested".

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5 Things To Ponder: Labor Day Edition Click to view

August 29th, 2014 Lance Roberts

The financial markets are set to wrap up the month with roughly a 3.5% gain, depending on where today's action ends, which is historically on the positive end of returns for the month. The histogram below shows the annual percentage change for the month of August. Since 1930, there have been a total of 47 positive months versus 38 negative (55% win ratio) with an average return of 1.47%. However, if we strip out the 37.7% gain in 1932, the one outlier, the average monthly return falls to just 1.04%.

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Getting Technical: Weekend Update Click to view

August 29th, 2014 Serge Perreault

Here’s the latest weekend update from Serge Perreault, a Chartered Professional Accountant and market technician located near Montreal, Canada. Serge has been following the U.S. market in a series of weekly charts. Here is his update on the S&P 500.

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S&P 500 Snapshot: A New Record Above 2000 Click to view

August 29th, 2014 Doug Short

In yesterday's update I asked the question "Will the S&P 500 move back above 2000 prior to the extended Labor Day weekend?" It did indeed, closing today at a record high at 2003.37. The index finished the month with a gain of 3.77% gain, the biggest monthly advance since February's 4.31% and the best August since the 6.07% surge in 2000.

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August Michigan Consumer Sentiment Bounced Back Click to view

August 29th, 2014 Doug Short

The Final University of Michigan Consumer Sentiment for August came in at 82.5, a bounce back from the 79.2 preliminary reading and its highest level since the April final. Today's number topped the Investing.com forecast of 80.1.

See the chart below for a long-term perspective on this widely watched indicator. I've highlighted recessions and included real GDP to help evaluate the correlation between the Michigan Consumer Sentiment Index and the broader economy.

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A Global Passive Benchmark with ETFs and Factor Tilts Click to view

August 29th, 2014 Adam Butler, Mike Philbrick and Rodrigo Gordillo

In a recent article published in Financial Analysts Journal, Charles Ellis makes an excellent case for the death of active management. Ellis asserts that the efficiency of a market is a function of the number and quality of active, informed investors at work in the market at any time. As more investors with increasingly deep educational backgrounds armed with mountains of data and obscene amounts of computational horsepower enter the market seeking inefficiencies, they will eventually eliminate all of the inefficiencies they so diligently pursue.

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The Latest on Real Disposable Income Per Capita Click to view

August 29th, 2014 Doug Short

With this morning's release of the July Personal Incomes and Outlays we can now take a closer look at "Real" Disposable Personal Income Per Capita.

The July nominal 0.07% month-over-month increase shrinks to -0.01% when we adjust for inflation. The year-over-year metrics are 3.49% nominal and 1.90% real.

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Moving Averages: Month-End Preview Click to view

August 29th, 2014 Doug Short

Here is a preview of the monthly moving averages I track after the close of the last business day of the month. All three S&P 500 strategies are now signaling "invested" -- unchanged from last month. One of the five of the Ivy Portfolio ETFs, the PowerShares DB Commodity Index Tracking (DBC), signals "cash", unchanged from last month.

If a position is less than 2% from a signal, it is highlighted in yellow.

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The BEA's Q2 GDP Second Estimate: A Deeper Analysis Click to view

August 28th, 2014 Rick Davis

In their second estimate of the US GDP for the second quarter of 2014, the Bureau of Economic Analysis (BEA) reported that the economy was growing at a +4.18% annualized rate, up about a quarter of a percent from their previous estimate. When compared to the prior quarter, the new measurement is now up about 6.3% from a -2.11% contraction rate for the 1st quarter of 2014. This is the largest positive quarter to quarter improvement in GDP growth in 14 years.

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Visualizing GDP: A Look Inside the Q2 Second Estimate Click to view

August 28th, 2014 Doug Short

The chart below is my way to visualize real GDP change since 2007. I’ve used a stacked column chart to segment the four major components of GDP with a dashed line overlay to show the sum of the four, which is real GDP itself....

Here is the latest overview from the Bureau of Labor Statistics:

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3 Things Worth Thinking About (Volume 6) Click to view

August 28th, 2014 Lance Roberts

Despite the logic of mainstream arguments that "buy and hold" investing will work, given a long enough time frame, the reality is that investors generally don't invest "logically." Almost all investors are driven by "psychology" in their decision-making which results in the age-old pattern of "buying high" and "selling low." This is shown in the 2013 Dalbar Investor Study, which stated "psychological factors" accounted for between 45-55% of underperformance.

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Real GDP Per Capita Rises to 3.49% Click to view

August 28th, 2014 Doug Short

Earlier today we learned that the Second Estimate for Q2 2014 real GDP came in at 4.17 percent (rounded to 4.2 percent), an upward revision from 4.0 percent in the Advance Estimate. Real GDP per capita was somewhat lower at 3.49 percent.

Here is a chart of real GDP per capita growth since 1960. For this analysis I’ve chained in today’s dollar for the inflation adjustment. The per-capita calculation is based on quarterly aggregates of mid-month population estimates by the Bureau of Economic Analysis.

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How Long to the Next Recession? iM’s Weekly Update Click to view

August 28th, 2014 Anton Vrba and Georg Vrba

The BCI at 179.2 is up from last week’s 178.5. The BCIg, the smoothed annualized growth of BCI, at 22.2 is at its highest level in the current business cycle, rising from last week's 21.6. This week’s BCI does not indicate a possible recession in the near future.

Figure 1 plots BCIp, BCI, BCIg and the S&P500 together with the thresholds (red lines) that need to be crossed to be able to call a recession.

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Q2 GDP Rises to 4.2% in the Second Estimate Click to view

August 28th, 2014 Doug Short

The Second Estimate for Q2 GDP, to one decimal, came in at 4.2 percent, an upward revision from the Advance Estimate of 4.0 percent. The GDP deflator used to calculate real (inflation-adjusted) GDP rose to 2.2 percent, an upward revision from the Advance Estimate of 2.0 percent. Investing.com had forecast a downward revision to 3.9 percent for today's GDP estimate and the deflator to remain unchanged at 2.0 percent.

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New Jobless Claims at 298K, A Bit Better Than Expected Click to view

August 28th, 2014 Doug Short

n the week ending August 23, the advance figure for seasonally adjusted initial claims was 298,000, a decrease of 1,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 298,000 to 299,000.

Today's seasonally adjusted number at 298K was slightly below the Investing.com forecast of 300K. The 4-week moving average is 6,000 above its post-recession low set three weeks ago.

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4 Years Until The Next Recession? Not Likely. Click to view

August 27th, 2014 Lance Roberts

David Rosenberg, in one of his recent missives, used the recent LEI to argue that "the next recession is at LEAST four years away."

This is pretty interesting coming from an economist/strategist who was formally considered a perma-bear now turned perma-bull by the media.

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Population-Adjusted Real Retail Sales: Another Perspective on the Economy Click to view

August 27th, 2014 Doug Short

Note from dshort: With the tidal wave of mid-month economic data, I failed to post my usual review of population-adjusted real retail sales. Here is the missing update.

Earlier this month, the Advance Retail Sales Report showed that sales in July were essentially flat, rising 0.04% month-over-month, as I reported in my real-time update.

With the subsequent release of the Consumer Price Index, we can now dig a bit deeper into the "real" data, adjusted for inflation and against the backdrop of our growing population

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Investors Have Nothing To Fear But Fear Itself Click to view

August 27th, 2014 Chris Kimble

The continued rally in the S&P 500 took it to historic levels yesterday, as the index hit 2000 for the first time ever. With these key markets above their 200MA and the Advance/Decline line near all-time highs, the trend is up and it looks like investors have little to fear at this time.

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Eye of the Storm, Part 1 Click to view

August 27th, 2014 Adam Feik

What's "normal" for financial markets and investing? In the 20th century, we all became accustomed to a “normal” that meant the following:

  • Growing prosperity
  • Major technological advances
  • Free market capitalism
  • Economic growth
  • Rising wages
  • Rising living standards
  • Improving life expectancies
  • "8-10% average annual returns" from the stock market
  • More…

    The "Real" Goods on the Today's Durable Goods Data Click to view

    August 26th, 2014 Doug Short

    Special note: This month, before doing my usual update, I want to put today's historic surge in the Durable Goods headline number in context. As the financial press has explained, the big jump was the result of international airplane orders. For a clear understanding of how big and how unprecedented the rise, let's look at the month-over-month change in this subcomponent.

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    Stock Market Crash, A Historical Pattern? Click to view

    August 26th, 2014 Wim Grommen

    Every production phase or civilization or other human invention goes through a so called transformation process. Transitions are social transformation processes that cover at least one generation. In this article I will use one such transition to demonstrate the position of our present civilization and its possible effect on stock exchange rates.

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    Consumer Confidence Rises Again Click to view

    August 26th, 2014 Doug Short

    The Latest Conference Board Consumer Confidence Index was released this morning based on data collected through August 14. The headline number of 92.4 was an improvement over the revised July final reading of 90.3, an upward revision from 90.9. Today's number beat the Investing.com forecast of 89.0. The current level is the highest since October 2007, the month the S&P 500 peaked prior to the Great Recession.

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    Richmond Fed Manufacturing Composite: "Continued to Improve in August" Click to view

    August 26th, 2014 Doug Short

    The August update shows the manufacturing composite at 12, up from 7 last month. Numbers above zero indicate expanding activity. Today's composite number was above the Investing.com forecast of 8.

    Because of the highly volatile nature of this index, I like to include a 3-month moving average, now at 7.7, to facilitate the identification of trends.

    Here is a snapshot of the complete Richmond Fed Manufacturing Composite series

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    Durable Goods Report: July Data Dominated by Aircraft Orders Click to view

    August 26th, 2014 Doug Short

    The August Advance Report on July Durable Goods was released this morning by the Census Bureau. Here is the Bureau's summary on new orders:

    New orders for manufactured durable goods in July increased $55.3 billion or 22.6 percent to $300.1 billion, the U.S. Census Bureau announced today. This increase, up five of the last six months, was at the highest level since the series was first published on a NAICS basis in 1992, and followed a 2.7 percent June increase. Excluding transportation, new orders decreased 0.8 percent.

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    NYSE Margin Debt Remains a Cause for Concern Click to view

    August 25th, 2014 Doug Short

    Note from dshort: The NYSE has released new data for margin debt, now available through July.

    There are too few peak/trough episodes in this overlay series to take the latest credit-balance data as a leading indicator of a major selloff in U.S. equities. But we'll definitely want to keep an eye on this metric in the months ahead.

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    Gasoline Price Update: Down for the Eighth Consecutive Week Click to view

    August 25th, 2014 Doug Short

    It's time again for my weekly gasoline update based on data from the Energy Information Administration (EIA). Rounded to the penny, Regular and Premium dropped two cents, the eighth week of price declines. Regular is up 26 cents and Premium 25 cents from their interim lows during the second week of last November.

    West Texas Intermediate Crude closed today at 93.34, down from 96.60 this time last week and the lowest since January.

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    Median Household Income Since the Great Recession: Spotlighting the Young and Old Click to view

    August 25th, 2014 Doug Short

    When we look at Real Median Household Income by age cohorts, we see that the income growth during the recovery has not be distributed evenly across the generations. The adjacent table features the non-seasonally adjusted real data by age groups on the second and fifth anniversaries of the recovery. The non-seasonally adjusted second anniversary, in June 2011, was two months before the seasonally adjusted monthly trough for all households.

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    Industrials: A Divergence Resembling 2007 and 2011 Click to view

    August 25th, 2014 Chris Kimble

    Sometimes diverging momentum can be a sign of a short-term high in the markets. The Industrials ETF XLI experienced falling momentum while prices were moving higher back in 2007 & 2011 at (1), which resulted in lower prices in months to come, once support and its 200MA was broken to the downside

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    A Different Look at Market Tops Click to view

    August 25th, 2014 Bill Hardison

    Last week the S&P pushed through to a new all-time high, recovering from a pretty minor 3.94% pullback into early August. In fact, it’s pretty remarkable that each pullback has been shallower than the last going back several years.

    You may have read commentary to the effect that the lack of any serious pullback means we are in the early stages of a new secular bull market. Some of the more bullish writers have gone as far as to predict that we won’t see a correction as large as 7% for at least the next several years -- well into 2017.

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    Understanding the CFNAI Components Click to view

    August 25th, 2014 Doug Short

    The Chicago Fed’s National Activity Index, which I reported on earlier today, is based on 85 economic indicators drawn from four broad categories of data:

    • Production & Income
    • Employment, Unemployment & Hours
    • Personal Consumption & Housing
    • Sales, Orders, & Inventories

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    Chicago Fed: Economic Growth Picked Up in July Click to view

    August 25th, 2014 Doug Short

    "Index shows economic growth picked up in July": This is the headline for today's release of the Chicago Fed's National Activity Index, and here are the opening paragraphs from the report:

    Led by improvements in production-related indicators, the Chicago Fed National Activity Index (CFNAI) rose to +0.39 in July from +0.21 in June. Three of the four broad categories of indicators that make up the index made positive contributions to the index in July, and two of the four categories increased from June.

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    Measuring Real Wages: "Lies, Damn Lies, and Statistics" Click to view

    August 24th, 2014 Doug Short

    Earlier this week I updated my commentary on "Five Decades of Middle Class Wages", an analysis of Real Average Hourly Earnings of Production and Nonsupervisory Employees. During the 21st century and especially since the end of the Great Recession, wages have clearly been stagnant.

    But, as Mark Twain famously remarked, "there are three kinds of lies: lies, damned lies, and statistics."

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    Tracking the Market with Social Media Click to view

    August 24th, 2014 Blair Jensen

    The Trade Followers Momentum indicator for the S&P 500 Index (SPX) continues to confirm the uptrend after clearing its consolidation warning two weeks ago. Although the uptrend is intact, momentum from both Twitter and StockTwits is getting a bit frothy. Both are at the highest levels they’ve reached since December of 2013. In the past, peaks in the +12 to +15 range have marked short term tops. Both indicators are now showing readings above +20. This is a very overbought condition which should signal a short term top when momentum turns back down.

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    Weekly Market Summary Click to view

    August 24th, 2014 Urban Carmel

    US indices have risen 8 of the past 11 days. SPX, NDX and DJIA have all gained about 5%. NDX and SPX made new all-time highs and DJIA is close to doing so.

    This was an incredibly quick fall and recovery to a new high. Recall that in July, fund managers had their second highest equity overweight since 2001. After every similar situation, SPX typically fell 8% over 4 weeks and then took another 6 weeks to regain all of its losses. This time: a 4% fall in 10 days with a full recovery 10 days later.

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    What the Baby Boomers turned Retirement Boomers mean for Growth, Jobs, Inflation and the Markets Click to view

    August 23rd, 2014 Franz Lischka

    More than a year ago I wrote two posts about how the retirement wave of the Baby Boomer generation would result in much lower growth, but full employment (see US Economy: Below Stall Speed or Already Above Potential? and Forget the Jobless Recovery, Get Ready for the Full-Employed Recession). Though more and more economists now recognize that it is to a large extend this retirement wave that has led to a huge exit out of the labor force, measured by the falling labor force participation rate, few fully anticipate the wide spread implications....

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    5 Things To Ponder: Interesting Stuff Click to view

    August 22nd, 2014 Lance Roberts

    I had to laugh this morning when I read Eddy Elfenbein's commentary on the recent market correction:

    "The vicious bear market that rocked Wall Street for a full two weeks has finally come to an end. Measuring from close to close, the S&P 500 plunged for a massive 3.94 loss between July 24 and August 7."

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    ECRI Recession Watch: Weekly Update Click to view

    August 22nd, 2014 Doug Short

    The Weekly Leading Index (WLI) of the Economic Cycle Research Institute (ECRI) is at 134.3, unchanged from the previous week. The WLI annualized growth indicator (WLIg) dropped to 2.8 from the previous week's 3.5.

    On Monday of this week, ECRI broke its silence to the general public with a new commentary on its website focused on housing affordability and home price growth.

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    Joe Friday: Waiting on the Commodity Bounce Click to view

    August 22nd, 2014 Chris Kimble

    Commodity Bulls were easy to find in April of 2011, as 70% of investors felt like Commodities were the place to be. Since then Commodity ETF DBC is down 20%. Did it pay to follow the crowd or go against it in 2011?

    Investors feel a little bit different about Commodities at this time, as bullish sentiment at (3) has declined to 30% bulls.

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    Gasoline Volume Sales, Demographics and our Changing Culture Click to view

    August 21st, 2014 Doug Short

    The Department of Energy’s Energy Information Administration (EIA) data on volume sales is over two months old when it released. The latest numbers, through mid-May, were published today. However, despite the lag, this report offers an interesting perspective on fascinating aspects of the US economy. Gasoline prices and increases in fuel efficiency are important factors, but there are also some significant demographic and cultural dynamics in this data series.

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    3 Things Worth Thinking About (Volume 5) Click to view

    August 21st, 2014 Lance Roberts

    There is an overwhelming consensus of opinion that the markets, and the majority of mainstream commentators, that when the Fed begins raising rates that it is a "good thing."

    The primary premise behind that consensus is that the economy is now growing steady enough to absorb the impact of higher interest rates. This opinion was espoused yesterday by Kansas City Fed President Esther George....

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    Median Household Incomes after the Great Recession: Household Types and Educational Attainment Click to view

    August 21st, 2014 Doug Short

    Yesterday I posted my analysis of selected features in Sentier Research's new report on the general decline in median household incomes since the end of the Great Recession in June 2009. My focus was on real income change by age groups and by racial/ethnic categories (more here). Today I'll examine the real income changes by household type and educational attainment.

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    Philly Fed Business Outlook: Highest Six-Month Outlook in 22 Years Click to view

    August 21st, 2014 Doug Short

    The Philly Fed's Business Outlook Survey is a monthly report for the Third Federal Reserve District, covers eastern Pennsylvania, southern New Jersey, and Delaware. The latest gauge of General Activity came in at 28.0, an increase from last month's 23.9. The 3-month moving average came in at 23.2, up from 19.0 last month. Since this is a diffusion index, negative readings indicate contraction, positive ones indicate expansion. Today's stunner: The six-month outlook at 64.4 is a 22-year high -- the highest since June of 1992.

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    Dollar Sentiment at Lofty Levels Click to view

    August 21st, 2014 Chris Kimble

    The U.S. Dollar has experienced a small rally over the past couple of months (up 3%), taking it back to falling resistance line (1) that has been in place for the past 11-years.

    This small rally has created a shift in bullish sentiment towards the U.S. Dollar. The lower inset chart shows that bulls were hard to find a couple of months ago. Now it's a little easier to find them.

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    How Long to the Next Recession? iM’s Weekly Update Click to view

    August 21st, 2014 Anton Vrba and Georg Vrba

    The BCI at 175.6 is up from last week’s downward revised 174.8. However, the BCIg, the smoothed annualized growth of BCI, at 17.3 is down from last week's 17.9. However, BCI does not indicate a possible recession in the near future.

    Figure 1 plots BCIp, BCI, BCIg and the S&P500 together with the thresholds (red lines) that need to be crossed to be able to call a recession.

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    Median Household Incomes Five Years After the Great Recession Click to view

    August 20th, 2014 Doug Short

    Based on new estimates derived from the monthly Current Population Survey (CPS), real median annual household income has fallen by 3.1 percent since the “economic recovery” began in June 2009. Adding this post-recession decline to the 1.8-percent drop that occurred during the recession leaves median annual household income now 4.8 percent below the December 2007 level. However, real median annual household income has begun to recover slowly during the past three years, June 2011 to June 2014.

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    Five Decades of Middle Class Wages: Update Click to view

    August 20th, 2014 Doug Short

    Note from dshort: I've updated this series to include yesterday's release of the July Consumer Price Index data.

    Here's a perspective on personal income for production and nonsupervisory private employees going back five decades.

    The Bureau of Labor Statistics has been collecting data on this workforce cohort since 1964. The government numbers provide some excellent insights on the income history of what we might think of as the private middle class wage earner.

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    Forecasting the Market: A Thought Experiment Revisited Click to view

    August 20th, 2014 Chris Turner

    As Q2-14 earnings begin, here is the latest update of my ongoing "thought experiment" for forecasting the S&P 500 price based on earnings fundamentals.

    The chart below is based on the latest trailing twelve-month earnings (TTM) data published on the Standard & Poor's website as of July 14th, 2014. The numbers are from the spreadsheet maintained by senior analyst Howard Silverblatt. See dshort's monthly valuation update for instructions on downloading the spreadsheet.

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    Two Measures of Inflation and Fed Policy Click to view

    August 20th, 2014 Doug Short

    Note from dshort: With the July FOMC minutes on tap for this afternoon and the Fed's annual Jackson Hole meeting kicking off tomorrow, I've updated the accompanying charts with the latest Consumer Price Index data from the Bureau of Labor Statistics. The annualized rate of change is calculated to two decimal places for more precision in the side-by-side comparison with the PCE Price Index.

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    Why the Big Mac’s Rising Prices Are More Alarming Than Its Fat Content Click to view

    August 19th, 2014 James Cornehlsen

    I’ve updated my periodic look at the Consumer Price Index (CPI) versus the Big Mac Index to coincide with The Economist’s bi-annual update of the Big Mac Index used for currency values and the most recent CPI for August 2014.

    What are we to believe? The change in the price of the Big Mac says one thing while the Bureau of Labor Statistics is telling us another.

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    A Long-Term Look at Inflation Click to view

    August 19th, 2014 Doug Short

    The August Consumer Price Index for Urban Consumers (CPI-U) released this morning puts the July year-over-year inflation rate at 1.99%, off the May 19-month high of 2.13%. It is well below the 3.87% average since the end of the Second World War and 16 percent below its 10-year moving average.

    Let’s take a step back and look at the history of inflation over the past 140 plus years.

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    Inflation: A Six-Month X-Ray View Click to view

    August 19th, 2014 Doug Short

    Here is a table showing the annualized change in Headline and Core CPI for each of the past six months. I’ve also included each of the eight components of Headline CPI and a separate entry for Energy, which is a collection of sub-indexes in Housing and Transportation.

    We can make some inferences about how inflation is impacting our personal expenses depending on our relative exposure to the individual components.

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    The Big Four Economic Indicators: Real Retail Sales and Industrial Production Click to view

    August 19th, 2014 Doug Short

    With this morning's release of the July Consumer Price Index, we can now calculate July Real Retail Sales. I reported the nominal Retail Sales last week, which showed July was flat month-over-month (up 0.04% to two decimal places), down from 0.2% in June. When we adjust for inflation, July sales came in at a -0.05%, a deeper contraction than the previous month's -0.02%. In fact, when we look at the real sales data, chained in constant July 2014 dollars, we see that this indicator has essentially flatlined since March.

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    S&P 500 Price Projections Based on Earnings: New Update & Slight Change Click to view

    August 19th, 2014 Chris Turner

    With 95% of Q2 2014 earnings reported, let's update the previous S&P 500 Price Projections through December 2015 using forecasted earnings previously. As a reminder, simply by tracking the forecasted earnings, we can "picture" where the S&P 500 would trade out to December 2015 based on historical data.

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    What Inflation Means to You: Inside the Consumer Price Index Click to view

    August 19th, 2014 Doug Short

    Let’s do some analysis of the Consumer Price Index, the best known measure of inflation. The Bureau of Labor Statistics (BLS) divides all expenditures into eight categories and assigns a relative size to each. The pie chart below illustrates the components of the Consumer Price Index for Urban Consumers, the CPI-U, which I’ll refer to hereafter as the CPI.

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    Ahead of Jackson Hole, July Inflation Remained Subdued Click to view

    August 19th, 2014 Doug Short

    The Bureau of Labor Statistics released the July CPI data this morning. Year-over-year unadjusted Headline CPI came in at 1.99%, which the BLS rounds to 2.0%, little unchanged from the previous month' 2.07%. Year-over-year Core CPI (ex Food and Energy) came in at 1.86% (rounded to 1.9%), essentially unchanged from the previous month's 1.93%. The non-seasonally adjusted month-over-month Headline and Core numbers were fractionally negative (-0.04% and -0.01%, respectively. On a seasonally-adjusted basis, the all items index posted its smallest increase since February.

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    Why the Trade-Up Housing Market Is Gone Click to view

    August 18th, 2014 Keith Jurow

    For four years, I have stood alone in offering compelling evidence that the housing crash is far from over and that the so-called recovery is nothing more than an illusion.

    Recently, concerns began to be uttered in the mainstream media that the recovery was showing signs of faltering. After all, new home sales were weak and the Case-Shiller index was showing slower price gains.

    Did this mean that Wall Street economists finally thought there was something to be worried about? Not at all. Sales of million-dollar homes were stronger than ever.

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    Oh Dollar, Where Art Thou? New Update Click to view

    August 18th, 2014 Chris Turner

    ...Regardless of one’s view, the net result is that our dollar is weak compared to a basket of currencies. Inflating or deflating the S&P 500 by the dollar’s value is a thought exercise meant to show how much our dollar value changes the perspective of the index if the dollar went back to 100. This chart series simply reflects the currency risk of a strong dollar and the net impact to the S&P 500 Index and earnings if the dollar rises to parity.

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    Commodities...Time To Catch a Falling Knife? Click to view

    August 18th, 2014 Chris Kimble

    The Commodities ETF DBC has been a little soft over the past seven weeks, losing around 7% in price (-2% YTD), while the S&P 500 has been flat (lower chart below).

    The top chart is the TR Continuous Index, which finds itself testing dual support, one of them being a 14-year rising support line.

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    Market Crash 1929, Mystery Unraveled? Click to view

    August 17th, 2014 Wim Grommen

    In the twenties of the last century the world, and especially the United States, experienced an economical high. As a result of this, share and stock prices rose to unprecedented heights, beyond reasonable values. The underlying economy had decreased in strength without this being reflected on the stock exchange. Investors were euphoric and stock prices were forced up against all economic logic.

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    Tracking the Market with Social Media Click to view

    August 17th, 2014 Blair Jensen

    The Trade Followers Momentum indicator for the S&P 500 Index (SPX) as cleared the consolidation warning that has been in effect since July 11th. The warning was removed at the close on Thursday when 7 day momentum broke above the down trend line that has been in place for a few months. The last dip in price for SPX also came with a positive divergence from momentum. This indicates that traders on Twitter saw the dip as a buying opportunity rather than the start of a larger correction.

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    Weighing the Week Ahead: Time for Central Bankers to Unwind? Click to view

    August 17th, 2014 Jeff Miller

    I could not resist the whimsical title. It is time for the annual Fed Symposium at Jackson Hole. This event, sponsored by the Federal Reserve Bank of Kansas City, has historically been the scene for various important hints about policy changes. It is also an occasion for informal, face-to-face meetings among central bankers and economists from around the world. This provides for a healthy exchange of ideas among academics, government officials, and private sector economists. I am skeptical of reports of discussions during white-water rafting....

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    Weekly Market Summary Click to view

    August 17th, 2014 Urban Carmel

    The first half of 3Q is done. So far, it's been a mess for equities worldwide. Europe and RUT are down 5-6% and SPX and DJIA are negative. Only Nasdaq and emerging markets show gains.

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    Rising Inventory & Low Rates Haven't Created More Housing Demand Click to view

    August 16th, 2014 Logan Mohtashami

    Simply put, the lack of recovery in housing demand is directly related to the lack of recovery in real median income and growth in year-over-year average hourly wages. Yet many have failed to recognize how important wages and liquid assets are to creating real demand in the housing market. This, in spite of the preponderance of evidence presented to us from the likes of the distinguished and insightful Professor Anthony Sanders, who has provided pictorial analyses of this issue.

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    5 Things To Ponder: Multifarious Cogitation Click to view

    August 15th, 2014 Lance Roberts

    Most of my weekend reading lists are generally focused on a common theme, however, that will not be the case this time. There were just too many interesting readings to share with you and felt that I would be remiss not to bring your attention to them. Therefore, this weekend’s “Things To Ponder” is comprised of a variety of readings that cover a fairly broad spectrum from educational to informative and even a little bit sarcastic. I hope that you will enjoy them.

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    Joe Friday: Silver on the Edge Click to view

    August 15th, 2014 Chris Kimble

    Silver has lost almost two-thirds of its value over the past three years. This decline has Silver hitting a 10-year support line inside of a three-year falling channel.

    Joe Friday: "It's very important that Silver holds at this long-term support line...."

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    Producer Price Index for July Comes in as Expected Click to view

    August 15th, 2014 Doug Short

    Today's release of the July Producer Price Index (PPI) for Final Demand rose 0.1% month-over-month seasonally adjusted. Core Final Demand was up 0.2% from last month. Both numbers matched the Investing.com forecast.

    The unadjusted year-over-year change in Final Demand is up 1.7%, down from last month's YoY of 1.9%.

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    Empire State Manufacturing Improves, But a Bit More Slowly Click to view

    August 15th, 2014 Doug Short

    This morning we got the latest Empire State Manufacturing Survey. The diffusion index for General Business Conditions continues to show improvement, although the headline number is is now at 14.7, down from 25.6 last month. The Investing.com forecast was for a reading of 20.0. The Empire State Manufacturing Index rates the relative level of general business conditions New York state. A level above 0.0 indicates improving conditions, below indicates worsening conditions. The reading is compiled from a survey of about 200 manufacturers in New York state.

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    Once in a Year Opportunity Click to view

    August 15th, 2014 Dwaine Van Vuuren

    We have spend the better part of a decade in the search for the ultimate indicator for the stock markets. Whilst it became clear early on in this quest that no one indicator would work all the time and every time, there are a few that stand out from the rest. One of them is our HILO Breadth Index. Apart from a multi-decade track record, the HILO index is very adept at warning in advance of protracted corrections/bear markets and for pinpointing market bottoms with very few false positives. This trifecta of features rarely occupy the same podium on most indicators.

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    3 Things Worth Thinking About (Volume 4) Click to view

    August 14th, 2014 Lance Roberts

    The first half of this week has been very interesting from an economic, financial and geopolitical viewpoint. Despite what appears to be globally increasing risks, the financial markets have seemed relatively unfazed. Historically, such calm has always existed prior to the eventual storm. This week’s “3 Things” takes a look at some of the “rising risks” that I believe are being ignored which could potentially be harmful to individual's portfolios.

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    Rising Interest Rates? Tell Me About Them! Click to view

    August 14th, 2014 Chris Kimble

    The "No- Brainer" can't miss trade coming into the first of this year was that interest rates were going to rise. 90 Days ago I shared that bond prices were breaking out, discussed in the "Tell Me About Rising Rates" post.

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    How Long to the Next Recession? iM’s Weekly Update Click to view

    August 14th, 2014 Anton Vrba and Georg Vrba

    The BCI at 174.9 is marginally down from last week’s 175.0. The BCIg, the smoothed annualized growth of BCI, at 17.9 is also down from last week's 18.6. However, BCI does not indicate a possible recession in the near future.

    Figure 1 plots BCIp, BCI, BCIg and the S&P500 together with the thresholds (red lines) that need to be crossed to be able to call a recession.

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    Recession Probability Models – August 2014 Click to view

    August 14th, 2014 Ted Kavadas

    There are a variety of economic models that are supposed to predict the probabilities of recession.

    While I don’t agree with the methodologies employed or probabilities of impending economic weakness as depicted by the following two models, I think the results of these models should be monitored.

    Please note that each of these models is updated regularly, and the results of these – as well as other recession models – can fluctuate significantly.

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    The Drag on Sustainable Economic Growth Click to view

    August 13th, 2014 Lance Roberts

    This past Monday, Stanley Fischer, the official who took over as Vice Chairman of the Federal Reserve in June, commented that the weak economic recovery might simply be continued fallout from the financial crisis and subsequent recession. However, “it is also possible that the underperformance reflects a more structural, longer-term shift in the global economy.”

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    The Interest Rate Conundrum: Flight to Quality or U.S. Slowdown? Click to view

    August 13th, 2014 Chris Puplava

    Summary

  • Many point to weakness in yields to signal economy has peaked
  • Forward looking economic data suggests otherwise
  • Evidence of a bull market top also not present
  • Capitulation by active managers suggests near-term downside is likely limited
  • More…

    Census Bureau Revisions to Retail Sales Click to view

    August 13th, 2014 Doug Short

    Earlier today I posted my monthly update on Retail Sales. Those of us who routinely track this series know that the Advance Estimate will be followed by a second estimate next month and a third estimate the month after. How big are those revisions? Are they big enough to warrant skepticism about the Advance Estimate?

    See for yourself. Here is a visualization of the cumulative change from the first to third estimates from January 2007 through May 2014, the most recent month for which we have all three data points.

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    Is a Secular (i.e., Long-Term) Bull Market in Stocks Possible? Click to view

    August 13th, 2014 Cris Sheridan

    Last week I interviewed Dan Wantrobski from Janney Capital Markets on their long-cycle model, which looks at the historical rhythm between interest rates, equities, and commodities going back to the 1880s.

    If the past long-term cyclical correlations between these major areas of the market were to play out as their research suggests, U.S. stocks and interest rates should continue to rise as commodities either fall or underperform.

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    July Retail Sales: Another Month of Disappointing Data Click to view

    August 13th, 2014 Doug Short

    The Advance Retail Sales Report released this morning shows that sales in July were flat month-over-month, down from 0.2% in June. Core Retail Sales (ex Autos) rose 0.1% in July, down from 0.4% in June. This was the second month of disappointing data.

    Today's headline and core numbers were well below the Investing.com forecasts, which were 0.2% for Headline and 0.4% for Core.

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    Proof of a Structural Change in the U.S. Workforce Click to view

    August 12th, 2014 Doug Short

    Yesterday Federal Reserve Vice Chairman Stanley Fischer gave a speech entitled The Great Recession: Moving Ahead. A key topic is the question of long-term changes to the economy -- whether we're experiencing economic weakness with deeper roots than the cyclical effect of the last recession.

    Despite Fischer's ambivalence toward "the relative importance of cyclical (short-term) versus structural (long-term) factors", I believe there is profound evidence that the workforce has undergone structural changes more fundamental than the cyclical impact of a recession.

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    NFIB: July Not A "4 Percent GDP Month" Click to view

    August 12th, 2014 Lance Roberts

    In my regular monthly update of the data provided in the National Federation of Independent Business monthly small business survey, I attempt to look beyond the “headline spin” as to what the data is suggesting about the overall economy. I like the NFIB survey, in particular, as it provides insight to what is happening on the "front line" of the American economy. As a small business owner, the survey often has a high degree of correlation to my outlook and current experiences.

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    Small Business Sentiment: "Optimism Ticks Up Slightly" Click to view

    August 12th, 2014 Doug Short

    The latest issue of the NFIB Small Business Economic Trends is out today. The August update for July came in at 95.7, a 0.7 point uptick from the previous month's 95.0. This is the first improvement in the headline number after three months of slippage. The index is now at the 31.9 percentile in this series, a level it last achieved in October 2007, two months before the last recession.

    The Investing.com forecast was for 96.3.

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    Are Investors Really All That Bearish? Click to view

    August 11th, 2014 Lance Roberts

    Gallup released a very interesting survey on Monday discussing individual’s “awareness” of the recent “bull markets” strong gains. From Gallup:

    “...the survey shows that while the majority of investors (64%) do know that stocks increased on average in 2013, barely a quarter (24%) believe they increased by 20% or better, and only 7% are aware that the average increase was in the 30% range. The largest proportion -- 37% -- believe stocks increased by 10%, while another 21% think stocks were flat and 9% think they decreased.”

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    If the Economy Is Improving, Why Are Investors Pricing in a Slowdown? Click to view

    August 11th, 2014 Michael Lombardi

    The Bureau of Economic Analysis (BEA) surprised even the most optimistic of economists when it reported the U.S. economy grew at an annual rate of four percent in the second quarter of 2014.

    On the surface, the number -- four percent growth -- sounds great. But how serious should we take that gross domestic product (GDP) figure?

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    Tracking the Market with Social Media Click to view

    August 10th, 2014 Blair Jensen

    The Trade Followers Momentum indicator for the S&P 500 Index (SPX) is still warning of consolidation, but showing some positive signs. As the market drifted lower the daily indicator didn’t record extreme negative prints. This was a result of many people on Twitter believing the events in Ukraine wouldn’t impact the market substantially. In addition, many tweets mentioned over sold conditions and made calls for at least a short term bounce.

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    Weighing the Week Ahead: The Market Risk from Current Crises Click to view

    August 10th, 2014 Jeff Miller

    In the past week there has been a dramatic change for the worse in everything we have been tracking in our “Ugly” section. Risks that are generally described with the euphemism of “geopolitical” have become expanded military actions – Ukraine, Gaza, and Iraq.

    With no sign of an early resolution, the crises deserve additional thought.

    I expect financial media to ask: How will the “headline risk” from crises affect financial markets?

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    5 Things To Ponder: Buy The Dip Or Market Correction Click to view

    August 8th, 2014 Lance Roberts

    Obviously, this weekend's reading list is focused on what to do now. Is this just another "dip" that investors should buy into? OR, is this the beginning of the long overdue intermediate term correction or a "mean reverting" process?

    I addressed the issue of potential support levels for the current correction in the post earlier this week. The problem is always identifying the "turn" in the markets from a bullish uptrend in advance.

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    Death Cross? Click to view

    August 8th, 2014 Dominic Cimino

    A colleague friend of mine recently mentioned a “Death-Cross” that has presented itself on the US 10year yield chart. He showed that when in the past the 50-day moving average for 10yr yields has moved beneath the 200-day moving average, this Death-Cross has preceded a significant move lower in 10yr yields as money has sought safety in Treasury Bonds, while money has simultaneously flowed from stocks leading to precipitous falls in stock market indices.

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    Fed Study Finds 2 million in "Forced Retirement", 52% Cannot Afford an Unexpected $400 Expense Click to view

    August 8th, 2014 Mike Shedlock

    I have talked about "forced retirement" 174 times over the course of the past few years.

    I defined the term as those who retired because they had to, not because they wanted to.

    Why might they have to? Easy. If someone of retirement age wants a job and needs a job and needs income, but does not have a job, the choice (after unemployment benefits expire) is to retire.

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    Joe Friday: S&P 500 Rumble from Thunder Down Under? Click to view

    August 8th, 2014 Chris Kimble

    Are we hearing some Thunder from Down Under? For the first time in a couple of years the All Ordinaries Index has closed on a weekly basis below rising support at the top of its multi-year rising channel.

    Back in 2007, this index and the S&P 500 broke key rising support at the same time. Could both of them be breaking support at the same time again?

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    3 Things Worth Thinking About (Volume 3) Click to view

    August 7th, 2014 Lance Roberts

    Yesterday, I discussed how large a potential "real" correction might be with a specific look at technical support levels. As I stated:

    "There is no exact answer to the potential magnitude of a correction in the markets. 'This' depends on 'that' to occur which is why trying predict markets more than a couple of days into the future is nothing more than a 'wild ass guess' at best. However, from this analysis, as shown in the table below, we can make some reasonable assumptions about potential outcomes."

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    Market Cap to GDP: The Buffett Valuation Indicator Click to view

    August 7th, 2014 Doug Short

    Note from dshort: I've updated this valuation indicator to include last week's Advance Estimate of Q2 GDP.

    Market Cap to GDP is a long-term valuation indicator that has become popular in recent years, thanks to Warren Buffett. Back in 2001 he remarked in a Fortune Magazine interview that "it is probably the best single measure of where valuations stand at any given moment."

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    How Long to the Next Recession? iM’s Weekly Update Click to view

    August 7th, 2014 Anton Vrba and Georg Vrba

    The BCI at 175.0 is down from last week’s 175.7. The BCIg, the smoothed annualized growth of BCI, at 18.6 is also down from last week's 19.0. However, BCI does not indicate a possible recession in the near future.

    Figure 1 plots BCIp, BCI, BCIg and the S&P500 together with the thresholds (red lines) that need to be crossed to be able to call a recession.

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    Thoughts Concerning The Next Financial Crisis Click to view

    August 7th, 2014 Ted Kavadas

    Since the Financial Crisis, a variety of reforms have been enacted that will purportedly lessen the possibility of future financial crises, and/or lessen the severity of such crises when and if they occur.

    One of these reforms is the new money market rules, and other proposed and enacted initiatives are discussed by Stanley Fischer in the July 10, 2014 speech titled “Financial Sector Reform: How Far Are We?”

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    How Big Would A "Real Correction" Likely Be? Click to view

    August 6th, 2014 Lance Roberts

    Over the last few days, my inbox has been overflowing with emails all asking the same question: "Is this THE correction?"

    The actual answer is probably "NO" for a couple of very specific reasons. First, even though the Federal Reserve is tapering their purchases, they are still currently injecting $25 billion per month which flows directly into the financial markets

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    ISM Data for July Suggest an Acceleration in Growth in Q3 GDP Click to view

    August 6th, 2014 Robert Lamy

    At the start of each month, the U.S. Institute for Supply Management (ISM) released data on the state of the manufacturing and non-manufacturing industries of the U.S. economy. The data are closely followed by economists, stock market brokers, and the media as they provide the earliest reading on the current state of the economy. The ISM provides data on the current performance of a number of indicators related to the manufacturing and non-manufacturing industries, such as production, employment, new orders, and backlog of orders, deliveries, inventories, new exports, imports, and prices.

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    iM’s Improved Floor-Leverage Rule with Put Option Insurance Click to view

    August 6th, 2014 Georg Vrba

    A Low-Risk Investment Strategy with a 5.7% Safe Withdrawal Rate

    The original Floor-Leverage Rule for Retirement calls for establishing a low risk Spending Floor Portfolio with 85% of one’s funds and a Surplus Portfolio of the remaining 15% in equities with 3× leverage. Unfortunately there is a high probability that the leveraged Surplus Portfolio will lose most of its value in extremely bad markets.

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    Current Problems Associated with the End of the Third Industrial Revolution Click to view

    August 6th, 2014 Wim Grommen

    Every production phase or civilization or other human invention goes through a so called transformation process. Transitions are social transformation processes that cover at least one generation. In this paper I will use one such transition to demonstrate the position of our present civilization. When we consider the characteristics of the phases of a social transformation we may find ourselves at the end of what might be called the third industrial revolution. Transitions are social transformation processes that cover at least one generation (= 25 years).

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    Where Are We in This Bull Market? Click to view

    August 6th, 2014 Chris Kimble

    The top chart below was created by Ryan Detrick, which highlights the average 5-year annualized returns of the S&P 500 since the 1970's.

    The bottom chart reflects where the S&P 500 was when the 5-year returns were at some extremes.

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    Market Valuation Overview: Yet More Expensive Click to view

    August 6th, 2014 Doug Short

    Here is a summary of the four market valuation indicators I updated each month.

    • The Crestmont Research P/E Ratio
    • The cyclical P/E ratio using the trailing 10-year earnings as the divisor
    • The Q Ratio, which is the total price of the market divided by its replacement cost
    • The relationship of the S&P Composite price to a regression trendline

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    Market Valuation, Inflation and Treasury Yields: Clues from the Past Click to view

    August 6th, 2014 Doug Short

    My monthly market valuation updates have long had the same conclusion: US stock indexes are significantly overvalued, which suggests cautious expectations on investment returns. In a "normal" market environment -- one with normal business cycles, Federal Reserve policy, interest rates and inflation -- current valuation levels would be a serious concern.

    But these are different times.

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    Household Demographics 2003 vs. 2013: Spotlight on Age of Head of Household Click to view

    August 5th, 2014 Mike Shedlock

    Here's a look at some interesting demographics, comparing 2003 vs. 2013.

    Number of Households by Age of Head of Household 2013 vs. 2003

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    The Q Ratio and Market Valuation: Monthly Update Click to view

    August 5th, 2014 Doug Short

    Quick take: Based on data extrapolations through the end of July, the Q Ratio is 72% above its arithmetic mean and 85% above its geometric mean. If we use the calculation method of Nobel Laureate James Tobin, the ratio is 90% above its arithmetic mean and 108% above its geometric mean.

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    Crestmont Market Valuation Update Click to view

    August 5th, 2014 Doug Short

    Quick take: Based on the July S&P 500 average of daily closes, the Crestmont P/E is now 92% above its arithmetic mean and at the 98th percentile of this fourteen-decade monthly metric.

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    Is the Stock Market Cheap? Click to view

    August 5th, 2014 Doug Short

    Here is a new update of a popular market valuation method using the most recent Standard & Poor's "as reported" earnings and earnings estimates and the index monthly averages of daily closes for the past month, which is 1,973.10. The ratios in parentheses use the monthly close of 1930.67. For the earnings, see the table below created from Standard & Poor's latest earnings spreadsheet.

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    Why Bubble-Era Jumbo Mortgages Are Doomed Click to view

    August 5th, 2014 Keith Jurow

    I have written extensively about bubble-era jumbo mortgages and have discussed in detail why they are a disaster waiting to happen. With origination of jumbos heating up again, this is a good time to revisit the jumbo mortgage market and see if the outlook has improved.

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    ISM Non-Manufacturing: July Composite at Record High Click to view

    August 5th, 2014 Doug Short

    Today the Institute for Supply Management published its latest Non-Manufacturing Report. The headline NMI Composite Index is at 58.7 percent, up from last month's 56.0 percent and a record high for this relatively new indicator, which goes back to January 2008, the second month of the Great Recession. Today's number came in well above the Investing.com forecast of 56.3.

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    Regression to Trend: A Perspective on Long-Term Market Performance Click to view

    August 5th, 2014 Doug Short

    Quick take: At the end of July the inflation-adjusted S&P 500 index price was 86% above its long-term trend, up from 84% above trend the previous month.


    About the only certainty in the stock market is that, over the long haul, over performance turns into under performance and vice versa. Is there a pattern to this movement? Let’s apply some simple regression analysis to the question.

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    Secular Bull and Bear Markets Click to view

    August 5th, 2014 Doug Short

    Was the March 2009 low the end of a secular bear market and the beginning of a secular bull? Without crystal ball, we simply don’t know. One thing we can do is examine the past to broaden our understanding of the range of possibilities. An obvious feature of this inflation-adjusted is the pattern of long-term alternations between up-and down-trends.

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    The Big Mac Economy: How the Hamburglar Stole the GDP Click to view

    August 4th, 2014 James Cornehlsen

    Extending our research on the use of the Big Mac Index, as created by The Economist, we applied the rise in the price of a Big Mac in relation to the overall economy. While Big Mac prices rose over the last three months, the price declined the past 12 months. The burger, as a representation of GDP, may be stealing more than calories from consumers.

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    Demographic Trends in the 50-and-Older Work Force Click to view

    August 4th, 2014 Doug Short

    Note from dshort: I’ve updated this commentary with the latest numbers from last week’s Employment Report.

    This is not the scenario that would have been envisioned a generation ago for the "Golden Years" of retirement. Consider: Today nearly one in three of the 65-69 cohort and almost one in five of the 70-74 cohort are in the labor force.

    More…

    Structural Trends in Employment by Age Group Click to view

    August 4th, 2014 Doug Short

    Note from dshort: I’ve updated this commentary with the latest numbers from last week’s Employment Report.

    The Labor Force Participation Rate (LFPR) is a simple computation: You take the Civilian Labor Force (people age 16 and over employed or seeking employment) and divide it by the Civilian Noninstitutional Population (those 16 and over not in the military and or committed to an institution). The result is the participation rate expressed as a percent.

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    Dow Theory Sell Signal Near? Click to view

    August 4th, 2014 Chris Kimble

    Dow Theory says the market is in an upward trend if one of its averages (industrial or transportation) advances above a previous important high and it is accompanied or followed by a similar advance in the other. The theory also says that when both averages dip below previous important lows, it's regarded as an indicator of a downward trend.

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    Multiple Jobholders as a Percent of the Employed: Two Decades of Trends Click to view

    August 4th, 2014 Doug Short

    What are the long-term trends for the percentage of multiple jobholders in the US? The Bureau of Labor Statistics has two decades of historical data to enlighten us on that topic, courtesy of Table A-16 monthly Current Population Survey.

    As of the latest monthly data, multiple jobholders account for less than 5% of civilian employment. The survey captures data for four subcategories, the current relative sizes of which I've captured in a pie chart below. Note that the distinction between "primary" and "secondary" jobs is subjective one.

    More…

    The Core Workforce Part-Time Employment Ratio Continues to Improve Click to view

    August 4th, 2014 Doug Short

    Let's take a close look at last week's employment report numbers on Full and Part-Time Employment. Buried near the bottom of Table A-9 of the government's Employment Situation Summary are the numbers for Full- and Part-Time Workers, with 35-or-more hours as the arbitrary divide between the two categories. The focus is on total hours worked: Full-time status may result from multiple part-time jobs.

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    Real Earnings of Private Employees Declined Again in July Click to view

    August 4th, 2014 Doug Short

    Here is a look at two key numbers in last week's monthly employment report for July:

    • Average Hourly Earnings
    • Average Weekly Hours
    The government has been tracking the data for Production and Nonsupervisory Employees for decades. But coverage of Total Private Employees only dates from March 2006.

    More…

    Tracking the Market with Social Media Click to view

    August 3rd, 2014 Blair Jensen

    The Trade Followers Momentum indicator for the S&P 500 Index (SPX) issued a consolidation warning on 7/11/14. That warning is still in effect. During the past week the indicator was turned back at its down trend line that had given the first indication that the market may experience some choppiness. In order to clear the consolidation warning momentum will need to rise above that down trend line.

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    Weighing the Week Ahead: Will the Fed’s Experiment End Badly? Click to view

    August 3rd, 2014 Jeff Miller

    Put together these ingredients: The biggest weekly market decline in two years, the winding down of earnings season, and a light week for economic data. The result? Financial TV producers will be seeking experts to explain whether we are starting a major correction. Analyzing the Fed will be a favorite theme.

    Unless and until we get a bit of a rebound in stocks, I expect a focus on this question:

    Will it all end badly?

    More…

    Weekly Market Summary Click to view

    August 2nd, 2014 Urban Carmel

    Despite the large fall this week, the longer term technical picture for SPX is positive. We will discuss the shorter term perspective in a moment, but for traders with a long time horizon, a return to the recent highs is odds-on.

    More…

    The Civilian Labor Force, Unemployment Claims and Recession Risk Click to view

    August 2nd, 2014 Doug Short

    Note from dshort: I’ve updated this commentary to include the latest labor force data in Friday’s employment report.

    A long-term chart of the seasonally-adjusted 4-week moving average of Initial Claims gives a rather distorted view of the economy. Why? Because it doesn’t take into account the 104% growth in the Civilian Labor Force since January 1967. For a better understanding of the weekly Initial Claims data, let’s view the numbers as a percent ratio of the Civilian Labor Force.

    More…

    5 Things To Ponder: The Interest Rate Conundrum Click to view

    August 1st, 2014 Lance Roberts

    After several months of quiet complacency, investors were woken up Thursday by a sharp selloff driven by concerns over potential rising inflationary pressures, rising credit default risk and weak undertones to the economic data flows. One of the primary threats that has been readily dismissed by most analysts is the impact from rising interest rates. Last week, the following chart was circulated again which shows that stocks perform well during rising interest rate environments:

    More…

    Inside the Latest Employment Report Click to view

    August 1st, 2014 Mike Shedlock

    Nonfarm Payrolls 209,000, Unemployment 6.2%, Employed +131,000

    Counting the upwardly revised 298,000 nonfarm payroll report in June (originally reported as 288,000), this was a decent report.

    Yet, digging into the details, the household survey showed a gain in employment of only 131,000. Thus, for the second consecutive month, the household survey was substantially weaker than the headline number.

    More…

    Liquidity Crunch Warning Finally Materialized Click to view

    August 1st, 2014 Dwaine Van Vuuren

    Fifteen trading days after our Average Liquidity Index (ALI) issued a liquidity crunch warning, the SP-500 finally succumbed into a decent sized correction. The two short-term liquidity indexes, one of which is described in “The HI-LO Breadth Indexes for the SP-500” issued warning even sooner, as can be seen below:

    More…

    The Unemployment Rate Is Not Signaling a Recession: Update Click to view

    August 1st, 2014 Georg Vrba

    A reliable source for recession forecasting is the unemployment rate, which can provide signals for the beginnings and ends of recessions. The unemployment rate model, updated with the July figure of 6.2%, does not signal a recession now.

    The model relies on four indicators to signal recessions:

    More…

    The Message from Small & Mid Caps Click to view

    August 1st, 2014 Chris Kimble

    The 2-pack below shows that the Russell 2000 and Mid Cap 400 ratios against the S&P 500 could be breaking support dating back a decade. The "Power of the Pattern" highlighted this past weekend illustrated that a rare situation that was taking place in the Russell/SPY ratio.

    More…

    ISM Manufacturing Index: Moderate Growth Continues Click to view

    August 1st, 2014 Doug Short

    Today the Institute for Supply Management published its July Manufacturing Report. The latest headline PMI at 57.1 came in well above last month's 55.3 percent and above the Investing.com forecast of 56.0.

    More…

    PCE Price Index: Headline and Core Little Changed, Remain Below Target Click to view

    August 1st, 2014 Doug Short

    The latest Headline PCE price index year-over-year (YoY) rate of 1.60%, down from the previous month's 1.66% (a downward adjustment from 1.77%). The Core PCE index of 1.49% is is a downward ajustment from 1.53% (an upward revision from previous month's 1.49%.

    The adjacent thumbnail gives us a close-up of the trend in YoY Core PCE since January 2012. I've highlighted the narrow 12-month range that has been breached to the upside for the past three months.

    More…

    209K New Nonfarm Jobs in July, Unemployment Rate Rises to 6.2% Click to view

    August 1st, 2014 Doug Short

    Today's report of 209K new nonfarm jobs was below the Investing.com forecast of 233K. The unemployment rate rose from 6.1% to 6.2%. The Investing.com expectation was an unchanged 6.1%....

    The labor force participation rate at 62.91% is fractionally off the interim low of 62.76% set in October of last year. Today's level was first seen in the Spring of 1978.

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    Anticipating the Employment Report for July Click to view

    July 30th, 2014 Doug Short

    With the Q2 GDP report now history, attention will focus on the Friday employment report from the Bureau of Labor Statistics. This monthly report contains a wealth of data for economists, probably the most publicized in the near term being the month-over-month change in Total Nonfarm Employment (the PAYEMS series in the FRED repository).

    Today we have another curious pair of July estimates: 218K new nonfarm private employment jobs from ADP and a much larger 306K total new jobs from TrimTabs.

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    Real Median Household Income Rose 0.69% in June Click to view

    July 28th, 2014 Doug Short

    Summary: The Sentier Research monthly median household income data series is now available for June. The nominal median household income was up $506 month-over-month but up only $1,791 year-over-year. Adjusted for inflation, it was up $368 MoM and only $710 YoY. The real numbers equate to a 0.69% MoM increase and a 1.34% YoY increase. June marks the second month of real increases following two months of declines.

    In real dollar terms, the median annual income is 6.6% lower (about $3,800) than its interim high in January 2008.

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    Happiness Revisited: A Household Income of $75K? Click to view

    July 14th, 2014 Doug Short

    A current APViewpoint discussion on "The Sad State of Happiness" included an indirect reference to a popular 2010 academic study by psychologist Daniel Kahneman and economist Angus Deaton. Their topic was the correlation between annual household income and day-to-day contentment. They analyzed more than 450,000 total responses to a Gallup weekly survey of households across the 50 states and DC. The survey was conducted in 2009.

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