Friday, December 13, 2019

Quick Note on This Week's Action

On Monday I suggested that a rally was in the near-term offing; citing pending positive trade news as one of a few potential catalysts.

Well, I won't chronicle the litany of conflicting news flashes that have hit the waves over the past 72 hours, but suffice to say that any objective onlooker would say that its simply more of the same. 

In a nutshell, it was: Releases yesterday by the U.S. of details of a done deal that turned out to be notably different than the done deal that China described in its press conference this morning, while both done deals turned out to be different than the done deal the President tweeted out during China's press conference this morning. Oh, and, by the way, technically, there's still no done deal. 

So while we'll continue to pay peripheral attention to the trade noise, while staying out of the way, we'll be focusing our attention on what matters -- which is the state of general conditions.

I just scored our macro index for the week, and conditions are still relatively weak. Presently our index scores a -5.75, down 3.45 off last week's score (range is +100 to -100). 

*Note: Our index has scored in the red for 8 consecutive weeks, and for 15 out of the past 20.

Deterioration this week was seen in U.S. jobless claims, in Citi's U.S. Economic Surprise Index, in The Baltic Dry Index, in individual investor sentiment, in commitment of futures traders reports, and in overall market breadth.

Strength was seen in small business sentiment, in Citi's Eurozone and China Economic Suprise Indexes, in the pricing of raw industrial materials, in copper (tracked separately) and in the high yield credit spreads.

Bottom line, conditions are extremely mixed with a slightly negative tilt. 

To simply repeat our message herein of the past several months; while the longest-ever expansion and bull market remains intact, some concerning cracks are forming.

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