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Market Update

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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:

  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 finished flat on Friday, and the S&P 500 ended to the week up .38%.

Source: dshort.com

This week data will be released on new home sales, pending home sales, consumer confidence and GDP.

After slipping in August, The Conference Board’s leading economic index rose .2% in September: “the U.S. LEI increased in September, reversing its August decline, which together with the pickup in the six-month growth rate suggests that the economy should continue expanding at a moderate pace through early 2017. Housing permits, unemployment insurance claims, and the interest rate spread were the main components lifting the index in September. Overall, the strengths among the leading indicators are outweighing modest weaknesses in stock prices and the average workweek.”

Sales of existing homes jumped 3.2% in September to an annual pace of 5.47 million, driven by first-time buyers (making up 34% of all transactions – the biggest share in four years). According to the National Association of Realtors, “the market fundamentals — primarily consistent job gains and affordable mortgage rates — are there for the steady rise in first-timers needed to finally reverse the decline in the homeownership rate”. Inventory tightened again, and stands at a 4.5 months supply at the current sales pace: “inventory has been extremely tight all year and is unlikely to improve now that the seasonal decline in listings is about to kick in. Unfortunately, there won’t be much relief from new home construction, which continues to be grossly inadequate in relation to demand”.

Following a surge in September, home builder confidence declined in October, with the NAHB housing market index slipping two points to a level of 63. Despite the decline, confidence is still solid, according to the NAHB: “the October reading represents a mild pullback from a jump in September, and indicates that the housing market continues to make slow and steady gains”. The NAHB also noted that “even with this month’s drop, builder confidence stands at its second-highest level in 2016, a sign that the housing recovery continues to make solid progress. However, builders in many markets continue to express concerns about shortages of lots and labor”.

The economy continued to move forward at a modest to moderate rate, according to the Fed’s Beige Book, with wage growth described as “fairly steady” and price growth as “mild”.

The Atlanta Fed’s GDPNow model forecast for third quarter growth inched up to 2% following the release of the Monthly Treasury Statement.

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