First let's visit the Conference Board's report on the Leading Economic Index -- LEI. You'll remember that this is a once a month report I use to get a quick gauge on the state of the economy. The LEI was up .3% for the tenth month in a row with the Coincident Economic Index up .2% and the Lagging Economic Index is still declining at .1% but slowing. That makes 2 up and the Lagging slowing -- good signs of good things happening.
Now on to my 3 Barchart indicators that I follow:
The Value Line Index -- contains 1700 stocks so it's broader than the S&P 500 and the narrower Dow 30 -- up 3.45% for the week which is the second week in a row of price appreciation
- Barchart's 13 technical indicators rate the index a 64% buy with 9 buys, 3 holds and only 1 sell
- The Index closed Friday above its 20, 50 & 100 daily moving averages
Barchart market momentum indicator -- approximately 6000 stocks covered -- the percentage of stocks closing above their DMAs for various time frames -- good signs here too
- 20 DMA -- 74.99% closed above -- only 36.77% did last week
- 50 DMA -- 61.58% closed above -- only 42.92% did last week
- 100 DMA 67.49% closed above -- only 53.72% did last week
The ratio of stocks hitting new highs to stocks hitting new lows for various time periods -- 1.0+ bullish, 1.0 neutral, below .99 bearish -- very bullish this week
- 20 day new high to new low ratio -- 1672/306 = 5.46
- 65 day new high to new low ratio -- 559/94 = 5.94
- 100 day new high to new low ratio -- 431/69 = 6.25
Summary -- According to the Conference Board indices the economy in the US is improving. My 3 Barchart indicators tell me the market is improving. I'm happy.
This week's investment strategy -- with both the economy and the market giving a thumbs up I'll trim any stock not trading above its 50 DMA and not be afraid to replace it. I'll stay fully invested but as always will trim if the individual stocks reverse.
Over on the Wall Street Survivor competition Anthony Mirhaydari is in first place for February so far and managed to get an 11.22% return with the S&P only up 3.29% for the same period. I got the silver so far this month with a return of 9.43%. I'll trim out ScanSource Inc (NASDAQ:SCSC) for failure to maintain a price above its 50 DMA and I'll wait till the market opens on Monday to replace it.
Jim Van Meerten is an investor who writes on financial matters here and on Financial Tides. Please leave a comment below or email JimVanMeerten@gmail.com
Disclosure: no positions in stocks mentioned