INDICATOR INSIGHTS

Monthly Update

CATEGORY                                                       

Market Sentiment/Risk                   MO. END   % CHANGE    LEVEL

Fear & Greed Index (Market sentiment)          54                 + 10             Fear

VIX (S&P 500 Volatility measure)                 16.1               + 3.7             Low - upswing

MMRI (Risk measured by interest rates)         258                - 31             High Risk

U.S. 10yr-bond yield                                        3.98               - .38             Decrease

Fear & Greed Bitcoin                                        52                  + 8               Neutral

CSI (Consumer Sentiment)                              46.8               - 1.7              Decrease

U.S. Economy                                       UP/DOWN       LEVEL

LEI (Overall leading indicators)                         Down             Bearish

CPI (Consumer Price Index)                           unchanged       Neutral 

       (Minus Food & Energy)                                 Up                Bearish               

ISM/PMI (Producers Manufacturing Index)     Down             Bearish - LTE

JOLTS (Unemployment categories)                     Up                Bearish - HTE

ADP (Jobs – non-farm payroll added)                Down             Bearish - LTE

         (Initial and continued claims)                       Up                Bearish

Transports (Shipping, durable goods orders)  Down             Bearish

Real Estate (Housing starts)                                 Down            Bearish

         (Total Construction Public/Private)           Down             Bearish

*This section updated on July 31, 2024

**LTE = Lower than expected (bearish) / HTE = Higher than expected (bullish)

***We do not present the most recent numbers as they are often revised, and not reported in the mainstream media. Actual figures and charts can be found on the internet, including the FRED (Federal Reserve Economic Data) website.

Price Action                                     UP/DOWN        LEVEL

RSI (Relative Price Strength)                        Down              Bearish

PCR (Put to Call Ratio – 5 day avg)                Up                 Bearish

ADL (Advance/Decline line)                            Up                 Bullish

MFI (Money Flow Index)                               Down              Bearish

Institutional Trading                          Heavy Selling     Bearish

Commodities                           MO. END   % CHANGE    LEVEL

Gold to Silver Ratio                         84.8              + 4.8            Slight silver bias

Crude Oil                                          76.31             - 7.19            Bearish                                                                                  

    As introduced in Chapter 3 of our publication When to Buy and When to Sell: Combining Easy Indicators, Charts, and Financial Astrology (available on Amazon), there are several “leading indicators” that go largely unnoticed and under-utilized by the average beginner or intermediate investor. Some of these indicators measure human emotion and market sentiment that often determines shorter term price action, while others uncover the true conditions of the economy, institutional buying and selling, and risk levels. 

     In our monthly “Indicator Insights” blog (first weekend of each month) we report the previous month-end levels (pertaining to the U.S. economy and/or the S&P 500) regarding several of these easy-to-read gauges we discuss, as well as others, to provide a quick-guide for our readers, with periodic analysis when necessary. Our monthly updates in this blog section include several market psychology related gauges, including the S&P 500 Fear & Greed index updated level, although there will be no commentary, as we dedicate an entire separate weekly blog to that indicator. Please note that we have made a few adjustments to our Indicator Insights introductory edition.   

      In this edition we are focusing on the fact that ALL U.S. economic indicators we track have turned bearish, indicating a likely recession. Most had been heading in that direction over the past few months, and recent jobs reports have caused a change in sentiment in that category as well. Once again, we should always take the information with a grain of salt, especially long-term investors, as initially reported numbers are often “revised” (and generally go unreported), until the information is included with the following month’s figures. The market always immediately over-reacts, so traders need to be aware at all times. 

      Other notable levels this month include the price action categories, especially Insider Trading, which has entered the “heavy selling” designation. When institutional and corporate insider selling reaches high levels, market downturns normally follow. Remember that most reports of these transactions are not required for 10-90 days, making the information “lagging” on most occasions in fast moving market conditions. Some of these insider sales will be reported as “scheduled” sells (and some are), however, there is no documented proof of that concept. Insiders and institutions generally do not sell when confident a stock price will increase in the future. The lone bright spot has been the recent uptick in the Advanced/Decline Line (ADL) (highlighted in last month’s edition), which suggest more widespread participation in advancing stocks, rather than only the Magnificent 7 leaders. This may fare well for the overall health of the market if it continues when bullish sentiment returns. 

      Finally, there appears to be decreasing consumer sentiment and spending across the board, signified by many of these indicators. Affordability has reached extremely low levels, and personal debt has reached all-time highs. With inflation, high interest rates, and increasing unemployment, the bearish signals for the economy are flashing brightly. Although the market has been disjointed from these obvious signs, it may be starting to catch up. Proceed cautiously as the wild daily swings in price will likely continue for some time. If “panic” sets in, which is likely, be prepared to take advantage of lower asset prices.