Posts Tagged ‘Economic Cycle Research Institute’

ECRI WLI “Flattens Out” at -9.8% – ECRI says “Gage is Fine”

ECRI WLI "Flattens Out" at -9.8% – ECRI says "Gage is Fine"

Courtesy of Mish

Lakshman Achuthan and Anirvan Banerji, Co-founders, Economic Cycle Research Institute (ECRI), continue to pour out statements about the ECRI WLI that are worth taking a close look at, if not outright challenging them.

Please consider Know How to Read WLI.

Sir, “Out on a limb, the ECRI weekly leading indicator … suggests a double-dip recession is imminent,” according to James Mackintosh (The Short View, August 4). This is a popular misconception pushed by pessimistic pundits.

Let’s review what the Weekly Leading index (WLI) has done this year. After rising to a two-and-a-quarter-year high by end-April, it plunged for all of two months – before flattening out and finally edging up to a six-week high by end-July. That’s hardly a recession signal.

Imagine flying in an aircraft that hits a huge air pocket and plunges 5,000ft in 10 seconds. That would leave you quite shaken up, but it doesn’t mean the aircraft’s about to crash – unless it keeps falling. That’s pretty much what’s happened with the WLI. Unless it turns down again and then keeps falling, it wouldn’t make sense to predict an imminent recession.

Many self-proclaimed experts have been back-fitting our data, looking at the WLI the wrong way, and screaming that the end is near. This is like people saying they don’t remember an aircraft dropping so fast and not crashing, while blaming the instrument makers for not trusting their own altimeter. Well, we do trust it. Bottom line, the gauge is just fine – as long as you know how to read it.

When there really is danger of an imminent recession, it will be signalled by a cyclical downturn in the WLI itself rather than its growth rate. But that hasn’t happened yet.

ECRI WLI

click on chart for sharper image

When there is "danger" of an imminent recession by the ECRI’s calls, history suggests we will have been in a recession for months. Nonetheless, one must be careful of "reading" indicators, especially when no one knows for sure what the hell it even consists of.

Instead, I would like to point out that two weeks of flattening after an enormous plunge to -10.8 is hardly worth calling "flattening". Let’s see where the index goes from here before we talk about "flattening" after that unprecedented nosedive.…
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ECRI Falls Deeper into the Abyss

ECRI Falls Deeper into the Abyss

Courtesy of Bondsquawk 

The Economic Cycle Research Institute released its Weekly Leading Indices for the week ending July 23. While the Weekly Leading Index ticked up to 121.1 from a downward revised prior period reading of 120.6, the Weekly Growth Rate Index fell further by two-tenths of a percent to -10.7 percent.  This latest reading marks the 12th decline in a row and 8th straight week in negative territory, dating back to the first week in June.

For our new Bondsquawk readers, check out this to understand the significance of this leading economic indicator. 


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ECRI TURNS NEGATIVE

ECRI TURNS NEGATIVE

Courtesy of The Pragmatic Capitalist

Via Barrons:

The Economic Cycle Research Institute today offered up its view of last week’s “weekly leading indicators,” a closely watched private mailing, today showed a dip in the indicator for the week ended last Friday to 123.2, a decline of 3.5%, in contrast to the 0.3% rise the preceding week.

The Institute’s Lakshman Achuthan, however, remarked that “While the plunge in WLI growth to a one-year low assures a significant slowing in U.S. economic growth in the coming months, the recent weakness has not lasted long enough to signal a new recession threat.”

The ECRI notice follows better-than-expected consumer confidence data this morning from the University of Michigan, but also a smaller-than-expected gain in business inventories in April, this morning’s weak retail sales data for May and, of course, last Friday’s disappointing jobs number.

ECRI2 ECRI TURNS NEGATIVE 


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Get Ready for a Double Dip

Get Ready for a Double Dip

Courtesy of John Nyaradi’s Wall Street Sector Selector 

In my view, it’s becoming increasingly likely that we’re rapidly heading towards a double dip recession.  It won’t be tomorrow or this week or even next month, but many warning flags point towards significant deterioration in the U.S. and global economy going forward and so I think that by the end of the year or early 2011, we could very well be facing a new leg down in the world’s economic situation. 

We’ll take a look at some of the factors at work but first let’s take a look at the past week and where we stand at Wall Street Sector Selector. 

Looking at My Screens 

Obviously the volatility that has come back into the markets in recent weeks was in play last week as the Dow experienced its third worst drop of the year on Friday, fast on the heels of Wednesday’s rocket ride up. 

This week’s action took our Standard, 2X and Option Master Portfolios to 100% cash as we took profits and cut losses during the week. 

Currently our portfolios look like this year to date: 

Sector Selector Standard:                  +7.5%

Sector Selector 2X:                              -17.8%

Sector Selector Option Master:      +47.1% 

This week’s positions were closed for the following gains/losses: 

VXX:                    +50.3%

EFZ:                     +2.8%

YXI:                      -8.5%

PSQ:                    -5.3%

EEV:                    +5.9%

SKF:                    -12.9%

December S&P Put Option:   +29.7%   

We remain in the “Red Flag Flying” mode, expecting lower prices ahead.  However, almost incredibly, our indicators are moving towards a new “buy” signal that we might see confirmed within the next days or weeks. 

A quite likely scenario is a relief, short term rally through August-September, followed by further declines into 4th Quarter and next year. 

Whatever happens, we will continue working both the “long” and “short” side of this market that remains unbelievably volatile and challenging. 

The View from 35,000 Feet 

This week’s action was driven by conflicting forces but ended largely negative, with the S&P 500 unable to break through its 200 Day Moving Average.  As we’ve said before, this average is widely viewed as the demarcation line between bull and bear markets, and until or if the major indexes are able to sustain positive momentum above this line, we can consider that we are in a bear market, at least for the short term. 

The big catalyst for Friday’s sell off, of…
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We Face Extraordinary Danger and Extraordinary Opportunity

We Face Extraordinary Danger and Extraordinary Opportunity

Courtesy of John Nyaradi’s Wall Street Sector Selector 

Black Cat Looking at Goldfish in Bowl

As I look across the global landscape today, I see extraordinary danger and extraordinary opportunity. 

Danger comes from the deteriorating economic environment at home and abroad and extraordinary opportunity comes from the enormous volatility and opportunities to “short” the market followed by a once in a generation opportunity to “buy dollars for dimes” once a bottom to this market has been reached.

Over the next five years I believe we will see more bankruptcies, both individual and sovereign, than we’ve seen in our history and we’ll also see more millionaires and billionaires created than ever before.

As individuals we will each make one of two choices.  We can assume the “deer in the headlights” posture and stash our money under the mattress, or we can educate ourselves, take prudently managed risk and work to take advantage of the enormous opportunities that will present themselves. 

Looking at My Screens 

This week we saw enormous volatility in every asset class as global forces washed over the markets of the world and investors/traders tried to position themselves on the only side of the market that counts, “the right side.” 

The downtrend that started in April is still firmly in place, notwithstanding Thursday’s rally from oversold levels and we remain in the “Red Flag Flying” mode expecting lower prices ahead. 

Taking a look at the chart of the S&P 500 we see:

chart courtesy of StockCharts.com 

In the chart above, we can see that the S&P remains just below its 200 Day Moving Average which will provide significant resistance while the MACD remains on a sell signal but momentum is turning up.  Above the blue 50 Day Moving Average is rolling over and the 200 Day red line is flattening which is also a bearish indicator. 

So for the time being, at least, we remain in a bearish configuration, expecting lower prices ahead. 

By the way, if you share our view and expectations of lower prices, this week’s mega rally on Thursday presented some extraordinary buying opportunities on the “short” side with relatively low risk at the moment.  I’ll be describing these in detail to my subscribers in our Position/Stop Loss Update this weekend. 

Members note that this week’s Position/Stop Loss Update will be sent on Monday afternoon due to markets being…
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Phil's Favorites

Don't fear a 'robot apocalypse' - tomorrow's digital jobs will be more satisfying and higher-paid

  Don't fear a 'robot apocalypse' – tomorrow's digital jobs will be more satisfying and higher-paid

Tomorrow’s good jobs will require digital skills like programming. alvarez/Getty Images

Courtesy of Christos A. Makridis, Massachusetts Institute of Technology

If you’re concerned that automation and artificial intelligence are going to disrupt the economy over the next decade, join the club. But while policymakers and academics agree there’ll be significant disruption, they differ about its impa...



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Kimble Charting Solutions

Financial Crisis Deja Vu: Home Construction Index Double Top?

Courtesy of Chris Kimble

Most of us remember the 2007-2009 financial crisis because of the collapse in home prices and its effect on the economy.

One key sector that tipped off that crisis was the home builders.

The home builders are an integral piece to our economy and often signal “all clears” or “short-term warnings” to investors based on their economic health and how the index trades.

In today’s chart, we highlight the Dow Jones Home Construction Index. It has climbed all the way back to its pre-crisis highs… BUT it immediately reversed lower from there.

This raises concerns about a double top.

This pr...



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Zero Hedge

Fiat Cuts 1,500 Jobs At Canada Minivan Plant

Courtesy of ZeroHedge View original post here.

If the consumer has gone cold or just silly millennials not forming families because of their limited financial mobility due to insurmountable debts, minivan demand in North America is plunging, resulting in planned production cuts and job losses at one Fiat Chrysler Automobiles plant in Canada. 

Bloomberg reports Fiat will cut productio...



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Insider Scoop

A Peek Into The Markets: US Stock Futures Plunge Amid Coronavirus Fears

Courtesy of Benzinga

Pre-open movers

U.S. stock futures traded lower in early pre-market trade. South Korea confirmed 256 new coronavirus cases on Thursday, while China reported an additional 327 new cases. Data on U.S. international trade in goods for January, wholesale inventories for January and consumer spending for January will be released at 8:30 a.m. ET. The Chicago PMI for February is scheduled for release at 9:45 a.m. ET, while the University of Michigan's consumer sentime...



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Biotech & Health

Could coronavirus really trigger a recession?

 

Could coronavirus really trigger a recession?

Coronavirus seems to be on a collision course with the US economy and its 12-year bull market. AP Photo/Ng Han Guan

Courtesy of Michael Walden, North Carolina State University

Fears are growing that the new coronavirus will infect the U.S. economy.

A major U.S. stock market index posted its biggest two-day drop on record, erasing all the gains from the previous two months; ...



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The Technical Traders

SPY Breaks Below Fibonacci Bearish Trigger Level

Courtesy of Technical Traders

Our research team wanted to share this chart with our friends and followers.  This dramatic breakdown in price over the past 4+ days has resulted in a very clear bearish trigger which was confirmed by our Adaptive Fibonacci Price Modeling system.  We believe this downside move will target the $251 level on the SPY over the next few weeks and months.

Some recent headline articles worth reading:

On January 23, 2020, we ...



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Promotions

Free, Live Webinar on Stocks, Options and Trading Strategies

TODAY's LIVE webinar on stocks, options and trading strategy is open to all!

Feb. 26, 1pm EST

Click HERE to join the PSW weekly webinar at 1 pm EST.

Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

This week, we also have a special presentation from Mike Anton of TradeExchange.com. It's a new service that we're excited to be a part of! 

Mike will show off the TradeExchange's new platform which you can try for free.  

...

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Chart School

Oil cycle leads the stock cycle

Courtesy of Read the Ticker

Sure correlation is not causation, but this chart should be known by you.

We all know the world economy was waiting for a pin to prick the 'everything bubble', but no one had any idea of what the pin would look like.

Hence this is why the story of the black swan is so relevant.






There is massive debt behind the record high stock markets, there so much debt the political will required to allow central banks to print trillions to cover losses will likely effect elections. The point is printing money to cover billions is unlikely to upset anyone, however printing trillions will. In 2007 it was billions, in 202X it ...

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Members' Corner

Threats to democracy: oligarchy, feudalism, dictatorship

 

Threats to democracy: oligarchy, feudalism, dictatorship

Courtesy of David Brin, Contrary Brin Blog 

Fascinating and important to consider, since it is probably one of the reasons why the world aristocracy is pulling its all-out putsch right now… “Trillions will be inherited over the coming decades, further widening the wealth gap,” reports the Los Angeles Times. The beneficiaries aren’t all that young themselves. From 1989 to 2016, U.S. households inherited more than $8.5 trillion. Over that time, the average age of recipients rose by a decade to 51. More ...



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Digital Currencies

Altcoin season 2.0: why bitcoin has been outgunned by crypto rivals since new year

 

Altcoin season 2.0: why bitcoin has been outgunned by crypto rivals since new year

‘We have you surrounded!’ Wit Olszewski

Courtesy of Gavin Brown, Manchester Metropolitan University and Richard Whittle, Manchester Metropolitan University

When bitcoin was trading at the dizzying heights of almost US$2...



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ValueWalk

What US companies are saying about coronavirus impact

By Aman Jain. Originally published at ValueWalk.

With the coronavirus outbreak coinciding with the U.S. earnings seasons, it is only normal to expect companies to talk about this deadly virus in their earnings conference calls. In fact, many major U.S. companies not only talked about coronavirus, but also warned about its potential impact on their financial numbers.

Q4 2019 hedge fund letters, conferences and more

Coronavirus impact: many US companies unclear

According to ...



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Lee's Free Thinking

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

 

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

Courtesy of  

The repo market problem isn’t the problem. It’s a sideshow, a diversion, and a joke. It’s a symptom of the problem.

Today, I got a note from Liquidity Trader subscriber David, a professional investor, and it got me to thinking. Here’s what David wrote:

Lee,

The ‘experts’ I hear from keep saying that once 300B more in reserves have ...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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