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Market Outlook - Walking A Fine Line Here
- Capacity utilization ramped up from 79.1% to 79.2%, while productivity grew by 0.4%. As long as these two data sets are rising, the country remains in state of economic expansion.
- S&P 500 charts are something of a mixed bag, depending on the time frame, though more bullish than bearish.
- NASDAQ Composite has also shown strength, but for a third time has butted up against a key resistance level.
Market Outlook - Bullish Undertones After Recent Weakness
- Capacity utilization and productivity numbers don't have much impact on the market's near-term swing, but the correlation between then and the long-term market is uncanny. They've been pointing higher.
- As has been the case four times before, the S&P 500 100-day moving average held firm again, stopping the downtrend (at least for now).
- Bolstering the bullish argument is that the VIX seems to have hit a ceiling of its own around 17.3. However, Russell 2k and Nasdaq Composite underperformance is a concern.
Market Outlook - Valuation Trepidation
- Back in late-2012 the market's trailing P/E was a reasonable 14.6. Now it's a frothier 17.6, and had been as high as 17.7 at one point last month.
- Since late-2011, the P/E ratio has somehow managed to rise because stocks have ascended faster than earnings have - that's a dangerous situation.
- The S&P 500 broke under its key 50-day moving average line at 1953 for the first time since April.
Market Outlook - Busy Week On Tap
- Beyond earnings reports, this week is going to be considerably busier in terms of economic numbers (Consumer Confidence, GDP, Employment).
- If the market does pull back further, there are key SPX moving averages and Fibonacci retracement levels that are converging here and should provide support down below.
- The VIX has yet to even surpass the key 13.3 level, indicating option traders aren't overly concerned about the market at this point.
Market Outlook - SPX 20 Day Moving Average Violated
- Last Thursday's plunge led to the first close on the S&P 500 Index below the 20-day moving average lines since May.
- The CBOE Volatility Index VIX was a pretty clear mirror image of the S&P 500 last week, surging on Thursday, but peeling back on Friday.
- While the charts and the rhetoric may imply the broad market is in "ok" shape, the reality is, Thursday's drubbing showed how vulnerable the market is at this point.
Market Outlook - Key SPX And VIX Levels To Watch
- Amid earnings season, this week's most important economic data will likely be underappreciated...capacity utilization and industrial productivity. Economists are looking for progress on both fronts, data is released Wednesday.
- Although the overbought S&P 500 Index lost ground last week, the key 20-day moving average line at 1961.28 is still acting as a floor.
- The CBOE Volatility Index is facing a key hurdle at 13.0. A move above the 13.0 level, in fact, would represent something of a paradigm shift for the VIX.
Market Outlook - This Rally Is Getting A Bit Steep
- Employment data last week was good, not great. This week doesn't hold much other than the Fed minutes release and the beginning of earnings reports.
- This current twelve-week, 9.3% runup in the S&P 500 is an unusually large and unusually long advance.
- The SPX is now 8.4% above the 200-day moving average line, and the CBOE Volatility Index closed at a multi-year low of 10.30 on Thursday.
Market Outlook - Nasdaq Hits Multi-Year Highs Amid A Risky Environment
- The economic data released last week was overall very good, with the exception of Q1 GDP.
- The VIX and S&P 500 P/E ratio are nearing dangerous valuations, but at the same time the Nasdaq Composite just broke through to new highs.
- Just because the market's overdue for a dip doesn't mean we're guaranteed to see it soon. Assume the trend currently in motion will remain in motion until proven otherwise.
Market Outlook - Is The Market Melting Up?
- The broad stock market momentum is attractive, it may even constitute a dangerous meltup. The near-term SPX ceiling is the 2000 level.
- The market loves to use big round numbers as floors and ceilings, and a move to 2000 on the S&P 500 would mean a 7% gain since mid-May.
- On the NASDAQ Composite, a near-term problem is that the index has once again stalled at 4372, like it did in early March.
Market Outlook - No Signs Of Impending Doom
- We've yet to see any signs of impending doom here. In fact, the S&P 500 could slide all the way back to the floor around 1900 without technically snapping the uptrend.
- A possible red flag is the way the NASDAQ's volatility index, the VXN, has already tested a key floor at 12.70.
- Stocks are trapped in that vexing no-man's land where they're too overbought to go higher but too well-supported to move any lower.
Market Outlook: Valuations Continue Higher Amid A Very Low VIX
- It's the fourth month in a row we've seen more than 200,000 new jobs created. We haven't seen that long of a growth streak since 1999.
- From a momentum standpoint, the bulls are clearly in charge right now. From a being-realistic standpoint, however, the market is being asked to do something from here that is difficult.
- As of right now, the S&P 500 is trading at a trailing P/E of 17.4. That's as high as it's been in a 'normal' environment in years.
Market Outlook: Calendar Axiom Broken, But Valuations Are A Concern
- After two months of trying, the S&P 500 finally cleared the hurdle at 1900 last week to close at 1923.57.
- Equally encouraging (perhaps even more encouraging) is the way the NASDAQ Composite has also sprung back to life in the weekly time frame.
- But remember the market generally doesn't make major moves in the spring or summer, and has been particularly reversal-prone of late - and rising P/E ratios are a concern.
Market Outlook - Finally A Breakout, But Caveats Remain
- This week will be much busier in terms of economic numbers -- durable goods, housing, consumer confidence.
- After more than two months of little more than sideways movement, the S&P 500 finally closed above a major line in the sand at 1885 and 1897.
- However, there are still multiple reasons to be concerned about the strength and duration of the current market rally.
Market Outlook - Red Flags Amid A Trading Range
- Producer price and consumer inflation rates rose to levels not seen since 2012 and 2013, respectively. Also, we saw signs of a rebound on the real estate and construction front.
- Both Industrial Productivity and Capacity Utilization fell, for the first time in a while. If May doles out another slide from these numbers, that could be a sign of trouble.
- The market's floors and ceilings are very well defined, and have been proven multiple times. But there are red flags that suggest growing odds of a more significant pullback.
Market Outlook - 9 Weeks (And Counting) Of Treading Water
- This week will more than make up for last week in terms of economic data…and then some: retail sales, inflation, industrial production, real estate.
- If it feels like the market is just spinning its wheels, you're not crazy – that's what's happening. The S&P 500 closed right around where it closed nine weeks ago.
- Will stocks will finally make a decision this week and actually start to make a meaningful directional move? Not necessarily.
Market Outlook - More Choppiness Ahead
- The big dip in the unemployment rate was more the result of fortuitous math than it was actual progress - number of people who have jobs actually fell in April.
- Despite several attempts, the S&P 500 has been completely unable to get above – and stay above – the recent ceiling at 1885.
- The VIX is once again on the verge of hitting a major floor at 12.30.
Market Outlook - Undeniable Loss Of Momentum
- The major economic focal point this week will be the employment data due on Friday. We really need payroll growth closer to 300,000 jobs per month to light the fire.
- It's pretty clear the NASDAQ has already fallen out of 2013's bullish channel. The NASDAQ is under its 100-day moving average line for the fist time in over a year.
- This is the third time (or fourth) that the 1885 level has been a problem for the SPX, so we can't ignore it.
Market Outlook - Busiest U.S. Factories Since Early 2008
- The economy not only appears to be pointing in the right direction, it appears to be accelerating its growth.
- We're now utilizing 79.2% of our manufacturing capability – the best reading since early 2008, before the subprime mess torpedoed the economy.
- While there are still several things that could nip this rally in the bud, from a momentum-follower's perspective, yes, we are bullish… though cautiously.
Market Outlook - Let The Dust Settle Here
- Bear in mind that even good economic numbers and/or earnings reports may be irrelevant this week in terms of doing anything to help the market rebound.
- This leg of the bull market has now gone 30 months without a correction of 10% or more.
- Despite the recent market weakness, the VIX has not yet reached a key spike fear level, but the Nasdaq Volatility Index has.
Market Outlook - Brutal Fakeout And Nasdaq Breakdown
- In many ways the jobs numbers on Friday were perfect for the market. They weren't too strong or too weak.
- The S&P 500 managed to punch through to new highs last week. In retrospect, however, one has to wonder if that push to new highs was a fakeout.
- What's this big drag that could be a problem for the overall market? It's the NASDAQ Composite.
Market Outlook - Stuck In The Middle
- Much like the housing and construction market data, the consumer opinion data continues to give us a mixed message.
- Personal income as well as personal spending were both reasonably strong in February - all in all, we see more working for the economy than working against it.
- The market is very much caught in the middle here - the S&P 500 Index has several support levels between 1835 and 1854, while there's a big ceiling at 1885.
Market Outlook - High Volume Sell-Offs
- February's industrial productivity grew by 0.6%; the industrial productivity index reached 106.6…the highest level it's ever been.
- While Friday's intraday reversal is telling, what's most bearish isn't the reversal itself, but the spike in volume that went along with it.
- Previous S&P 500 volume spikes like this one have proven to be key pivot points (bearish as well as bullish) in recent history.
Market Outlook - Time For Bulls To Be Skeptical
- On producer price inflation, one can't help but wonder if we're seeing flashes of deflation now. The same underpinnings that are crimping inflation are crimping the housing and construction market.
- This week is going to be a little busier, with important data… particularly on the real estate and construction front.
- Now that the S&P 500 index is under its 20-day moving average line at 1854.2, it's tougher to argue that the bigger short-term trend is still bullish.
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