For those who have money in the market in 401k's or direct equities, ie, stock.
Presently the down is up around 150 pts., the nasdaq 35, and the s&p 500 15. These are extremely huge numbers, that are supported by very big volume, ie, buying.
What is going on and why did this happen, and most importantly why today?
Most big price and volume moves have three components or reasons for such moves.
1. Today, the Chicago Purchasing Managers Index was realesed, this number came in at 55.2. This is a measurement of what manufacturing purchase managers, ie, the folks who buy raw materials to make things are doing with their order books. Any number above 50 indicates expansion, below 50 contraction. For the last year this number has been up and down around 47-52 like a ping pong ball. Very very erratic and inconsistent, ie, leading to not alot of confidence.
This is very important for the economy, majority of manufacturing is in the mid-west, which is what this number reads, this number leads other manufacturing throughout us.
2. Finally business spending has also ticked up, ie, business's are investing capital into their business's, they do this because they either have to or they expect growth, along with this uptick came an increase in personal computers for business's, ie, they are replacing 1999 hardware they upgraded for y2k.
3. The overall market was on a tear since March, for the last six weeks it has pulled back and consolidated around the 50 day moving average line. This is the point where most mutual funds like to purchase stocks, ie, no one yells at them for buying here, it is a safe place, managers get upset if they over pay for stocks, and stocks trading below 50 day moving average are out of favor.
Kind of like that old saying, "no one ever got fired for buying IBM" well most money managers do not get fired when buying at the 50 day moving average.
Now, the good part about 3 is during the consolidation over last six weeks, no one was selling heavily, ie, people where holding onto stock waiting for it to go higher.
Now we also got a bonus report today, they expected jobless claims to rise by 14,000 and it actually came in at -3,000. This is the third report that indicated jobless claims are finally going down. This trend is still early and a lagging indicator, yet, like all of us we want people to find work and take care of their families, it makes all of us happier.
Where does that leave us now?
We finally have factual confirmation to support the run up in equities that started in March, again, very positive and much needed. This piece of the puzzle has to be in place.
Where shall it lead us?
Well, no one can predict the future, understanding that clearly it seems at this point the business cycle has fully bottomed and is beginning to complete a full stabilization cycle, which leads to the next stage of some much needed growth. ( disclaimer, this is a BEST GUESS statement , remember no one can predict the future )
Good Luck
Presently the down is up around 150 pts., the nasdaq 35, and the s&p 500 15. These are extremely huge numbers, that are supported by very big volume, ie, buying.
What is going on and why did this happen, and most importantly why today?
Most big price and volume moves have three components or reasons for such moves.
1. Today, the Chicago Purchasing Managers Index was realesed, this number came in at 55.2. This is a measurement of what manufacturing purchase managers, ie, the folks who buy raw materials to make things are doing with their order books. Any number above 50 indicates expansion, below 50 contraction. For the last year this number has been up and down around 47-52 like a ping pong ball. Very very erratic and inconsistent, ie, leading to not alot of confidence.
This is very important for the economy, majority of manufacturing is in the mid-west, which is what this number reads, this number leads other manufacturing throughout us.
2. Finally business spending has also ticked up, ie, business's are investing capital into their business's, they do this because they either have to or they expect growth, along with this uptick came an increase in personal computers for business's, ie, they are replacing 1999 hardware they upgraded for y2k.
3. The overall market was on a tear since March, for the last six weeks it has pulled back and consolidated around the 50 day moving average line. This is the point where most mutual funds like to purchase stocks, ie, no one yells at them for buying here, it is a safe place, managers get upset if they over pay for stocks, and stocks trading below 50 day moving average are out of favor.
Kind of like that old saying, "no one ever got fired for buying IBM" well most money managers do not get fired when buying at the 50 day moving average.
Now, the good part about 3 is during the consolidation over last six weeks, no one was selling heavily, ie, people where holding onto stock waiting for it to go higher.
Now we also got a bonus report today, they expected jobless claims to rise by 14,000 and it actually came in at -3,000. This is the third report that indicated jobless claims are finally going down. This trend is still early and a lagging indicator, yet, like all of us we want people to find work and take care of their families, it makes all of us happier.
Where does that leave us now?
We finally have factual confirmation to support the run up in equities that started in March, again, very positive and much needed. This piece of the puzzle has to be in place.
Where shall it lead us?
Well, no one can predict the future, understanding that clearly it seems at this point the business cycle has fully bottomed and is beginning to complete a full stabilization cycle, which leads to the next stage of some much needed growth. ( disclaimer, this is a BEST GUESS statement , remember no one can predict the future )
Good Luck
Comment