Tag: Technically

The Markets End The Week In Good Shape (Technically Speaking For The Week Of 10/5-10/9)

My Friday column is divided into two sections. The first uses the long-leading, leading, and coincidental format developed by Arthur Burns and Geoffrey Moore to determine the current economic trajectory. The second looks at the markets.

Long-Leading Indicators

Financially, the economy is in good shape:

The Fed has been pumping cash into the economy (left). The Fed’s credit market support programs have lowered financial stress; the BBB yield (right) has dropped to 5-year lows.

The earnings picture is improving — but remember that word is clearly relative (emphasis added):

The expectation is for total S&P 500 earnings to decline -22.8% from the same period last year on -2.9% lower revenues. This would follow the -32.3% decline in Q2 when economic and business activities came to a halt as a result of the pandemic-driven lockdowns.

The earnings outlook has been steadily improving since the start of Q3, as economic and business

Read More

The SPY And QQQ End The Week Teetering At Key Levels (Technically Speaking For The Week Of 9/14-9/18)

My Friday column contains two sections. The first uses the analytical format developed by Arthur Burns and Geoffrey Moore that organizes economic data into long-leading, leading, and coincidental buckets. The second looks at the chart of ETFs that track major averages.

Long-leading indicators

Burns and Moore use mid-rated bond yields to determine the level of financial stress. Since the time of their writing, several Fed banks have developed indexes which more broadly measure the same thing:

All three indexes — which spiked during the Spring lockdowns — have returned to more normal levels.

Third-quarter earnings estimates are still weak. From Factset (emphasis added):

The estimated (year-over-year) revenue decline for Q3 2020 is -3.9%, which is below the 5-year average revenue growth rate of 3.4%. Five sectors are expected to report year-over-year growth in revenues, led by Health Care sector. Six sectors are expected to report a year-over-year decline in

Read More