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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:
The S&P 500 finished higher on Friday, ending the week with a .2% gain.
This week data will be released on durable goods, consumer confidence, pending home sales, consumer spending and GDP.
The Conference Board’s leading economic index continued to rise in May, up .3%. According to the Conference Board, “the U.S. LEI continued on its upward trend in May, suggesting the economy is likely to remain on, or perhaps even moderately above, its long-term trend of about 2 percent growth for the remainder of the year. The improvement was widespread among the majority of the leading indicators except for housing permits, which declined again. And, the average workweek in manufacturing has recently shown no sign of improvement”.
It’s time for the Fed to pause on rate hikes, according to St. Louis Fed President James Bullard. Speaking on Friday in Nashville, Bullard said that the central bank should wait and see how the economy plays out in the coming months: “many future developments could impact [the Fed’s] policy path, but the Fed does not need to pre-empt any of them”.
Following a decline in April, sales of existing homes rebounded in May, rising 1.1% to an annual rate of 5.62 million. According to the National Association of Realtors, “the job market in most of the country is healthy and the recent downward trend in mortgage rates continues to keep buyer interest at a robust level…current demand levels indicate sales should be stronger, but it’s clear some would-be buyers are having to delay or postpone their home search because low supply is leading to worsening affordability conditions”.
New home sales picked up in May after dipping in April, rising 2.9% to an annual pace of 610,000. At the current sales pace, it would take 4.6 months to exhaust the available supply.
The nation’s largest banks have ‘strong’ capital levels and would be able to continue lending during a recession, according to the first round of the Fed’s annual stress test. The 34 banks tested would see losses of $383 billion under a “severely adverse” scenario including 10% unemployment and a 35% drop in the commercial real estate market.