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:
The market was fairly complacent last week about negotiations between Greece and its creditors, until Friday when stocks rallied after eurozone finance ministers approved a four-month extension on Greece’s bailout.
The S&P 500 and the Dow climbed to new record highs, posting weekly gains for the third straight week and marking the Dow’s first record close of the year (and the S&P 500’s third). The Russell 2000 reached a record high as well.
With 443 companies in the S&P 500 having reported earnings, the blended earnings growth rate for the fourth quarter stands at 3.5%.
This week will see the release of data on existing home sales, new homes sales, consumer confidence, durable goods, inflation and GDP.
Foreign ownership of US government debt increased in 2014, according to data released by the Treasury last week. Foreigners held $6.154 trillion in Treasuries at the end of 2014 – up from $5.793 at the end of 2013, as a stronger dollar and higher yields made Treasuries more attractive. While China is still the US’s largest creditor, its holdings slipped over the year from $1.270 trillion to $1.244 trillion. As the second largest creditor, Japan increased its Treasury holdings to $1.231 trillion from $1.182 trillion. Together, China and Japan account for about 40% of foreign ownership of US government debt.
Household debt continued to climb in the fourth quarter, according the New York Fed’s Household Debt and Credit Report. Outstanding household debt climbed $117 billion, or 1%, to a total $11.83 trillion. Balances increased across the board – mortgages rose $39 billion, student loans rose $31 billion, credit card debt increased by $20 billion and auto loans were up $21 billion. At the same time, the delinquency rates for auto and student loans worsened: “although we’ve seen an overall improvement in delinquency rates since the Great Recession, the increasing trend in student loan balances and delinquencies is concerning”, according to the Fed’s report.
Americans households (where the head of household is between 25 and 64) are facing a $4.13 trillion retirement deficit, according to the Employee Benefit Research Institute. If Social Security benefits were eliminated, that shortfall would jump 88% to $7.87 trillion.
The Conference Board’s Leading Economic Index rose in January, though at a slower pace as it edged up .2%. “While the LEI suggests a positive short-term outlook in 2015, the lack of strong momentum in residential construction, along with a weak outlook for new orders in manufacturing, poses a downside risk for the U.S. economy”, according to the report.