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Market Direction Is Important –
Updated Chart of the S&P 500 and Secondary Signals
Of our Four secondary indicators under our MTI:
Relative Strength Index (RSI)-Positive
Chaikin Money Flow (CMF)-Positive
Money Flow Index-MFI-Positive
More on the Market and the Economy:
Though stocks were flat on Friday, a rally earlier in the week left the S&P 500 to log a 2.8% gain – it’s best weekly gain since last November.
This week data will be released on existing home sales, new home sales, durable goods orders, consumer spending and GDP.
The Fed’s FOMC minutes showed that in discussing rate hikes, “members agreed that it would be important to closely monitor global economic and financial developments and to continue to assess their implications for the labor market and inflation, and for the balance of risks to the outlook,” and that “waiting for additional information regarding the underlying strength of economic activity and prospects for inflation before taking the next step to reduce policy accommodation would be prudent”.
The Conference Board’s leading economic index declined for the second month in January: “The U.S. LEI fell slightly in January, driven primarily by large declines in stock prices and further weakness in initial claims for unemployment insurance. Despite back-to-back monthly declines, the index doesn’t signal a significant increase in the risk of recession, and its six-month growth rate remains consistent with a modest economic expansion through early 2016”.
Inflation was flat in January, with unchanged food prices and a 2.8% decline in energy costs, while the cost of housing and health care both increased.
Homebuilder confidence slipped in February, as the NAHB housing market index fell to 58. According to the NAHB, “Though builders report the dip in confidence this month is partly attributable to the high cost and lack of availability of lots and labor, they are still positive about the housing market. Of note, they expressed optimism that sales will pick up in the coming months”. The report also noted that “builders are reflecting consumers’ concerns about recent negative economic trends. However, the fundamentals are in place for continued growth of the housing market. Historically low mortgage rates, steady job gains, improved household formations and significant pent up demand all point to a gradual upward trend for housing in the year ahead”.
The Atlanta Fed’s GDPNow model is forecasting growth of 2.6% for the first quarter following the release of data on housing starts.
Home affordability improved in the fourth quarter, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI), as 63.3% of new and existing homes sold were affordable to families earning the US median income of $65,800.