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)-Negative
Money Flow Index-MFI-Positive
More on the Market and the Economy:
Last Thursday, stocks rose for a fourth day in a row as the European Central Bank unveiled an expanded asset purchase program which includes buying 60 billion euro ($69 billion) of securities per month through September 2016. Stocks retreated on Friday, ending the four-day rally and paring the first weekly gains of 2015. After slipping .6% on Friday, the S&P 500 ended the week up 1.6%.
The yield on the ten-year Treasury logged its fourth straight weekly decline on Friday as the ECB’s stimulus plan sent investors jumping into US debt.
This week will see the release of data on durable goods, new home sales, pending home sales, GDP and the FOMC meeting announcement.
The Conference Board’s Leading Economic Index rose .5% in December, with the report noting that “December’s gain in the LEI was driven by a majority of its components, suggesting the short-term outlook is getting brighter and the economy continues to build momentum. Still, a lack of growth in residential construction and average weekly hours in manufacturing remains a concern”.
The International Monetary Fund cut its global growth outlook for 2015 to 3.5% from a previous 3.8%, marking the steepest cut to its projections in three years. The growth estimate for the world economy for next year was cut to 3.7%. According to the lender’s chief economist, “the world economy is facing strong and complex cross currents. On the one hand, major economies are benefiting from the decline in the price of oil. On the other, in many parts of the world, lower long-run prospects adversely affect demand, resulting in a strong undertow.”
The report reiterated the estimate that the drop in oil prices will boost global output by .3 to .7% to this year, “but this boost is projected to be more than offset by negative factors, including investment weakness as adjustment to diminished expectations about medium-term growth continues in many advanced and emerging market economies”.
The US was the exception, with the IMF upgrading its growth estimate to 3.6% for this year, as cheap oil and fiscal tightening will offset an increase in interest rates. In her first speech of the year a couple of weeks ago, IMF managing director Christine Lagarde cautioned that oil prices and U.S. growth “are not a cure for deep-seated weaknesses elsewhere.”