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Market Update

Market Direction Is Important –

Updated Chart of the S&P 500 and Secondary Signals

Of our Four secondary indicators under our MTI:

  1. Relative Strength Index (RSI)-Negative

  2. Chaikin Money Flow (CMF)-Positive

  3. MACD- Negative

  4. Money Flow Index-MFI-Positive

More on the Market and the Economy:

Stocks rebounded on Friday, and in turn recovered much of the previous day’s loss. Friday’s rally trimmed the S&P 500’s weekly loss to 1.4%.


Small cap stocks took a beating last week, with the Russell 2000 making headlines when it’s 50-day moving average crossed below its 200-day moving average, resulting in a ‘death cross’ (this points to downward momentum). The last time the Russell 2000 hit a death cross was in July 2012 (in that instance the index bounced back and continued an upward trend rather than selling-off). The index posted a weekly loss of 2.4%, and is down 5.5% this month.

High-yield bond funds retreated last week, after investors pulled a net $1.2 billion in the week ended September 17th, which marked the third straight week of outflows, and the seventh week of outflows in ten. Concern is brewing in the high-yield space amid the prospect of the Fed raising rates.

The largest high-yield ETF, the iShares High Yield Corporate Bond Fund, is near a twelve-month low.

The market will have plenty of news to consider this week, with data to be released on pending home sales, home prices, consumer spending, construction spending, factory orders and the jobs report.

The US public pension gap is bigger than $2 trillion, according to a report released by Moody’s Investor Service on Thursday. Measuring the liabilities of the largest 25 public pensions, the report found that the gap tripled over an 8 year period through 2012: “Despite the robust investment returns since 2004, annual growth in unfunded pension liabilities has outstripped these returns”. Part of the problem, of course, stemmed from double-digit losses suffered during the recession – in the fiscal years 2008 and 2009, pension plan assets fell almost 22% cumulatively on average.

Close to 950,000 homes regained positive equity in the second quarter, according to CoreLogic. That brings the number of homes with positive equity to over 44 million, and it leaves 5.3 million homes (around 10.7% off all properties with a mortgage) still underwater.


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