On the Road: the Stock Market Is Speaking, Are You Listening?

  • by itradmin - Thu, 02/15/2018 - 14:59

Consumer Activity and PMI Leading Indicators

ITR projected a slowing rate of growth in GDP and US Industrial Production in the second half of this year. The recent decline in the stock market, as measured by the S&P 500 Industrials, established a tentative 12/12 high in January. The 12/12 is the 12-month rate of growth (a pressure curve); it is an effective tool for forecasting a business or an entire economy. The 12/12 will typically lead the US Industrial Production 12/12 through a peak by three months, but longer is certainly normal.

On February 12, the S&P 500 stood at 2658.7, and that created a January 12/12 high. Of course, the market could rebound before the month is over. The average month-to-month increase over the last 12 months is 38.3 points. The 12/12 high will hold until the S&P 500 tops 2875, 216.3 points higher than the February 12 mark. Readers who are in a Leading Indicator program should especially take note of the tentative high in the stock market.

The list of indicators in support of our forecast for the second half of the year is getting longer. In addition to the stock market, our proprietary ITR US Consumer Leading Indicator™ is signaling a slowing rate of growth for retail sales later this year. The August high in the Purchasing Managers Index 1/12 rate-of-change is also signaling a slowing rate of growth in Industrial Production activity in the second half of this year.

The signs are there, now is the time assess your cash needs for a slowing growth economy.

Alan Beaulieu