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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)-Negative
Chaikin Money Flow (CMF)-Negative
Money Flow Index-MFI-Positive
More on the Market and the Economy:
After a turbulent week that began with stocks plunging dramatically on Monday and the S&P 500 ending its fifth-longest correction-free streak, and punctuated by wild swings in commodity markets, stocks closed calmly on Friday and posted modest weekly gains.
Following a steep drop early in the week, the S&P 500 recovered and rose out of correction territory with a decent gain on Wednesday, and logged a .9% gain for the week. On Friday, a “death cross” – the 50-day moving average crossing below the 200-day – appeared in a chart of the S&P 500. The last death cross for the index appeared on August 12, 2011. The Dow flashed a death cross on August 11th.
This week data will be released on manufacturing, construction spending, the trade deficit, the jobs report and the Fed’s Beige Book.
Speaking last Monday, Atlanta Fed President Dennis Lockhart said that he still expects a rate hike this year, though he did not specify a month, while cautioning about a weak Chinese currency and falling oil prices: “I expect the normalization of monetary policy —- that is, interest rates —- to begin sometime this year. Currently, developments such as the appreciation of the dollar, the devaluation of the Chinese currency, and the further decline of oil prices are complicating factors in predicting the pace of growth.”
Two days later, New York Fed President William Dudley dialed back expectations for a September rate hike, “From my perspective, at this moment, the decision to begin the normalization process at the September FOMC meeting seems less compelling to me than it was a few weeks ago. Normalization could become more compelling by the time of the meeting as we get additional information on how the U.S. economy is performing, and more information on international and financial market developments.”
At the Fed’s Jackson Hole Symposium, Vice Chairman Stanley Fischer left a September hike on the table and held the middle ground by saying that “I think it’s early to tell, the change in the circumstances which began with the Chinese devaluation is relatively new and we’re still watching how it unfolds. I wouldn’t want to go ahead and decide right now what the case is, more compelling, less compelling.”
According to new estimates from the Congressional Budget Office, this year’s deficit will be “noticeably smaller than what the agency projected in March, and fiscal year 2015 will mark the sixth consecutive year in which the deficit has declined as a percentage of gross domestic product (GDP) since it peaked in 2009”. The 2015 deficit is expected to fall to $426 billion – $59 billion less than last year, and $60 billion less than estimated in March. The shortfall would be the smallest since 2007. But over the next 10 years the budget outlook “remains much the same…by 2025, debt held by the public will be higher relative to the size of the economy than it is now”.
Source: Congressional Budget Office
Earlier this month marked the 80th anniversary of the signing of the Social Security Act. According to the Social Security Trustees, last year 48 million retirees, their dependents and survivors collected $706.8 billion in benefits. And those benefits are critical: around half of married beneficiaries and three-quarters of single beneficiaries rely on the program for the majority of their income.
Mortgage delinquencies fell to 5.3% of all outstanding loans at the end of the second quarter, according to the Mortgage Bankers Association, reflecting a decline across all stages of delinquency. The serious delinquency rate, for mortgages 90 days or more past due, stood at 1.9% as of the second quarter.