Wednesday, September 4, 2013

Our Stock Market Indicator Taking a Rest (excerpt)

Our Fundamental Stock Market Indicators (FSMI), which rose to a new cyclical high during the week of August 3, is down over the past three weeks since then by 2.1%. This indicator has been highly correlated with the S&P 500 since 2000, and especially so during the current bull market.

The recent weakness in the FSMI has been mostly attributable to a decline in the Consumer Comfort Index component that more than offset the positive impact of falling initial unemployment claims, which is a second component of the FSMI. Meanwhile, the CRB raw industrials spot price index, the third component, has been flat-lining since the spring.

Today's Morning Briefing: Uncertainty. (1) Syria is serious concern. (2) Geopolitical jitters offset strong PMIs. (3) What will FOMC do if oil prices spike higher? (4) Forward earnings mostly stalling at record highs. (5) Uncertainty weighing on valuations. (6) Low but rising yields likely to keep a lid on P/Es. (7) US economic indicators are mixed. (8) M-PMIs show improving global manufacturing. (9) Global Net Earnings Revisions Indexes remain negative and have yet to confirm upbeat M-PMIs. (More for subscribers.)

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