INDICATOR INSIGHTS
CATEGORY
Market Sentiment/Risk MO. END % CHANGE LEVEL
Fear & Greed Index (Market sentiment) 68 + 5 Greed
VIX (S&P 500 Volatility measure) 17 + 2 Steady
MMRI (Risk measured by interest rates) 234 - 11 Lower - high risk
U.S. 10yr-bond yield 3.75 - .16 Decrease
Fear & Greed Bitcoin 63 + 34 Greed
CSI (Consumer Sentiment) Up slightly 0.1 Slight increase
U.S. Economy UP/DOWN LEVEL
LEI (Overall leading indicators) Down Bearish
GDP (Gross Domestic Product) Up slightly Neutral
ISM/PMI (Producers Manufacturing Index) Down Bearish *See below
CPI (Consumer Price Index) Even Neutral
(Minus Food & Energy) Up Bearish
JOLTS (Unemployment categories) Up Bearish
ADP (Jobs – non-farm payroll added) Down Bearish
(Initial and continued claims) Up Bearish
Transports (Shipping, durable goods orders) Up slightly Bullish *See below
Real Estate (Housing starts) Down Bearish
(Total Construction Public/Private) Down Bearish
Mortgage demand Down Bearish *See below
Retail Spending Up Bullish
*This section updated on September 27, 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) Up Bullish
PCR (Put to Call Ratio – 5 day avg) Down Bullish
ADL (Advance/Decline line) Up Bullish
MFI (Money Flow Index) Even Neutral
Institutional Trading Selling Bearish
Commodities MO. END % CHANGE LEVEL
Gold to Silver Ratio 83.4 - 2.2 Neutral
Crude Oil 68.64 - 5.01 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 continue to focus on the fact that most U.S. economic indicators we track remain bearish, continuing to suggest coming recession, although a few have leveled out. This trend has continued through several months, despite economic reports to the contrary (we consistently note that initial reports are often revised downward). Last month’s big news was the huge “revision” of the job creation report from 2023, by the Department of Labor and Statistics, downward, to 818,000 less than originally reported. Despite the fact that institutions are well aware of the inevitable revisions, the market always immediately over-reacts to these initial reports, creating volatility in price action. Traders always need to be attentive, while long-termers should at least be aware.
This month, during the Federal reserve meeting on Wednesday, September 18, Fed chair Jerome Powell suddenly dropped interest rates by 50 basis points (or .50). The cut did not make much sense (outside of politicization) as the economy continues to struggle and inflation remains high across the board. He continued to state that the decision for cuts in the future would be “data dependent,” although it was suggested more cuts are coming. Should that happen, expect inflation to rise once again. Massive job lay-offs from large companies, and less jobs available in the public sector, also continued through the month, putting pressure on the consumer.
This month’s readings of note again include Durable Goods, as well as Manufacturing, and Transports, which often go hand-in-hand. The main driver of Gross Domestic Product (GDP) for several months has been military spending, not the actual production of goods and products, which skews the numbers. Further proof of this fact is the continued lower readings of the related industries, including Global manufacturing, which now sits at 15-month lows, and Federal Express’ negative earnings announcement, confirming the slowdown in industrial output.
Additionally, both Consumer Confidence and Consumer Sentiment remain at very low levels, despite a slight uptick in spending, due to that interest rate cut. Do not be fooled into thinking the lower and middle-income households participated in that increase in recreational spending. Mortgage applications also rose slightly, however, that was only due to refinancing, not new purchases.
As mentioned last month, the equities markets remain disjointed from the economy, as it appears to be being propped-up artificially, between signs of the government buying its own debt, military conflict spending, and interest rate manipulation. Although the wild daily price swings calmed for a while for the most part, market volatility will likely continue for some time, with the upcoming Presidential election, and the expectation of more rate cuts before the end of 2024. Keep some cash ready to take advantage of lower asset prices in the future, if “panic” sets in due to uncertain global conditions.
