The Stock Market

Our Fundamental Stock Market Indicator (FSMI) remains bullish. However, it did slip 0.2% during the week of March 17 after rising eight consecutive weeks by 15.9%. The next few weeks should be interesting for the three components of the FSMI:

(1) We’ll see if initial unemployment claims continues to fall. If it moves higher, then the weather-did-it crowd will jump for joy.

(2) The CRB raw industrials spot price index has been flattened in recent days on concerns that China’s economy is slowing and Europe is falling deeper into recession following the release of weak “flash” March PMIs last week. There will be another batch of global PMIs coming out for March early next week.

(3) The Weekly Consumer Comfort Index has been surprisingly buoyant in recent weeks despite rising gasoline prices.

Despite the surge in gasoline prices, consumer-related stocks have gone vertical this year. In the S&P 500, both Consumer Discretionary and Consumer Staples are trading at new record highs and at valuation premiums to the market. The Consumer Discretionary Retailing industry stock price index is up 20.1% ytd to a record high, and trading at about 18 times forward earnings.

BULLET POINTS FROM TODAY’S MORNING BRIEFING: (1) Next stop after 1400? (2) Will US lift global growth, or get dragged down? (3) The “weakness dividend” puts a lid on commodity prices. (4) Calming oil market’s jitters. (5) Go Home vs. Go Global. (6) Energy and Materials stocks diverging with commodity prices this year. (7) S&P 500 revenues still looking up. (8) Are durable goods orders durable? (9) Housing is crawling out of the cellar. (10) Do Industrials have more upside? (More for subscribers.)