Market Analysis

Breaking Down the U.S. Economy

In last week's article I elaborated on why it's important to allow the economic backdrop to guide us when price action becomes erratic. Today, I thought we would take a short tour of the economy to see how some of the more important elements are trending.

As you're well aware, GDP for the second quarter came in at 4.2%. That represents an uptick from the growth rates we saw over the last couple of years, and is the fastest annualized rate of growth since 2014.

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Posted in: Debt Economy Inflation Recessions

Lessons From a Textbook Correction

If you've ever caravanned with others on a drive or hike, then you know that sometimes different parties move at different speeds. The inevitable result is that the lead party has to slow down, or stop and wait for the others to catch up.

If you happen to be climbing Mount Everest, or trekking across the Pacific Coast Trail, then these "pauses" to regroup can be a lifesaver. They allow everyone to check in and verify that all is well before the climb continues.

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Posted in: Corrections Dow Theory Economy Psychology

Which Yield Curve Spread is the Most Accurate?

What's the best thing to talk about when the market is firing on all cylinders? Recessions, of course. Rather than getting caught up in the excitement of Nasdaq 8,000, which we reached today, or the fact that the S&P has finally broken out to new highs, let's ignore the crowd and stay focused. We have work to do.

Today we're going to drill down into the yield curve once again, because while this incredibly accurate recession predictor has been around for decades, its popularity and overall presence in the minds of investors seems to have increased recently.

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Posted in: Economy Federal Reserve Recessions

Approaching Major Resistance

For the last few months, we've been commenting on the "stealth" nature of this bull market. While most investor attention has been focused on the major averages, which have been laying low, many of the junior indexes have taken out their high-water marks. That left us with the impression that the majors would soon follow.

The list of indexes that have climbed to new highs following the February swoon is quite exhaustive.

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Posted in: Bonds Corrections Interest Rates Market Breadth Momentum

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