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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)-Negative
Chaikin Money Flow (CMF)-Positive
Money Flow Index-MFI-Positive
More on the Market and the Economy:
Stocks sold off on Friday, and the S&P 500 ended the week down 3.85%, its biggest weekly loss in two years.
A key question is how long the current decline might last, and how large it could be. As a starting point, this history of drawdowns over the last 10 years is quite helpful.
Drawdowns of 5-10% are completely routine, often occurring several times a year. The last two years have been quite unusual.
This week data will be released the service sector, the trade deficit and the Job Openings and Labor Turnover Survey.
The economy added 200,000 jobs in the first month of the year, as construction companies added 36,000 jobs, restaurants added 31,000, and health-care firms increased by 21,000. The unemployment rate held steady at 4.1%, while wages rose at the fastest yearly pace since 2009.
Pending home sales edged up .5% in December, marking the third consecutive monthly gain. According to the National Association of Realtors, “another month of modest increases in contract activity is evidence that the housing market has a small trace of momentum at the start of 2018. Jobs are plentiful, wages are finally climbing and the prospect of higher mortgage rates are perhaps encouraging more aspiring buyers to begin their search now”. However, “these positive indicators may not lead to a stronger sales pace. Buyers throughout the country continue to be hamstrung by record low supply levels that are pushing up prices”.
Manufacturing slowed a bit but remained strong in January, with the ISM manufacturing index slipping to 59.1% as measures of new orders, production and employment fell.
The Atlanta Fed’s GDPNow forecast for first quarter growth jumped to 5.4% following the release of manufacturing data.