INDICATOR INSIGHTS

Monthly Update

CATEGORY                                                       

Market Sentiment/Risk                   MO. END   % CHANGE    LEVEL

Fear & Greed Index (Market sentiment)          49                  - 14             Neutral

VIX (S&P 500 Volatility measure)                 21.9               + 4.9            Neutral but rising

MMRI (Risk measured by interest rates)         284                + 50            Rising - high risk

U.S. 10yr-bond yield                                        4.39                + .64           Highest in 4 months

Fear & Greed Bitcoin                                        72                    + 9             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     *15-month low

CPI (Consumer Price Index)                                Even              Neutral       

       (Minus Food & Energy)                                 Up                Bearish               

JOLTS (Unemployment categories)            Down slightly     Neutral

ADP (Jobs – non-farm payroll added)      Down             Bearish     *12k added - LTE

         (Initial and continued claims)                       Up                Bearish

Transports (Shipping, durable goods orders)  Down             Bearish     

Real Estate (Housing starts)                         Down             Bearish     *See below

         (Total Construction Public/Private)  Down             Bearish

Mortgage demand                                             Down              Bearish     *See below

Retail Spending                                                    Even               Neutral 

Business Activity                                                 Down              Bearish 

 

*This section updated on November 1, 2024

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

***We may not present the most recent numbers (often revised, and unreported 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)                          Even               Neutral

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

ADL (Advance/Decline line)                      Up slightly         Bearish             *dropping

MFI (Money Flow Index)                                Even               Neutral 

Institutional Trading                                 Selling            Bearish

 

Commodities                            MO. END   % CHANGE    LEVEL

Gold to Silver Ratio                          83.8              + 0.4             Neutral

Crude Oil                                           69.33           + 0.69            Neutral

                                                                                                                                                    

    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 a coming recession, though financials have been resilient. This trend has continued through several months, despite economic reports to the contrary (we consistently note that initial reports are often revised downward). Two months ago there was a  huge downward “revision” to the job creation report from 2023, by the Department of Labor and Statistics, of 818,000 less jobs than originally reported. This month we had a downward revision of over 60k jobs in August, and over 30k jobs in September (what a surprise). 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 stock price action. Traders always need to be attentive, due to tight stop losses that tend to be triggered, while long-termers should at least be aware. 

      Combined with continued massive job lay-offs from large companies, and less full-time non-government jobs available in the public sector, pressure continues to be put on the consumer. This week’s jobs creation report revealed only 12k added, which was about 100k less than expected. The media was quick to blame the two major hurricanes and layoffs from a major airline, but the “expected” number derives from analysts and economists, so that “reason” is questionable. They also failed to mentioned the downward revisions from August and September. 

      This month’s “readings of note” again includes Durable Goods, Manufacturing, and Transports, which often go hand-in-hand, all reaching 15-month lows. 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.  

      The Real Estate industry has fared no better, with new construction and existing home sales struggling. A portion of the existing home sales figures are unfortunately due to defaults, which skews the actual statistics. Mortgage demand has also decreased as Fed rate cuts have not coincided with home loans, which have risen.  

      Consumer Spending remained neutral, however, the monthly report does not filter out how much of the spending was forced credit card usage for those struggling to afford their everyday bills. Do not be fooled into thinking the lower and middle-income households participated in any increase in recreational spending. Holiday shopping will inevitably raise this index as families will need to provide some type of gift giving.       

      As mentioned during the past few months, the equities markets remain disjointed from the economy. The markets continue to be propped-up artificially, between signs of the government buying its own debt, military conflict spending, and interest rate/bond manipulation. Although the wild daily price swings calmed for a while for the most part, market volatility will likely continue during this week’s 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, in the event “panic” sets in due to uncertain global conditions.

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