Housing Data Comes In Below Expectations
The economy continues to produce mixed signals for investors; some data looks
good and some not so good. Falling under the "not so good" category is Monday's
housing data. From Reuters:
The National Association of Realtors said its pending home sales index
declined 2.5 percent to 106.0, the lowest level since January of last year.
Economists polled by Reuters had forecast contracts rising 0.5 percent
last month.
How Impressive Is The Current Rally?
As noted on February
15, green days and countertrend moves are common within the context of
a bearish trend. Given the S&P 500 has booked two consecutive weeks of
gains, it is logical to ask:
Does the current move in stocks look like a new uptrend or a countertrend
move that could be fully retraced?
The question above is addressed from a probability perspective in this week's
stock market video.
Manufacturing To Remain Soft?
Economic data was released from the Windy City Monday providing some insight
into the health of manufacturing. From CNBC:
The Chicago Purchasing Managers Index came in at 47.6 for February, badly
missing economists' estimates. Economists polled by Reuters had expected
a reading of 54.0, down from the 55.6 reading reported a month earlier.
A reading below 50.0 indicates contraction in the sector.
Joseph A. LaVorgna, Chief Economist at Deutsche Bank, commented via that
Chicago PMI is "broadly consistent with further softness in manufacturing".
Investment Implications - The Weight Of The Evidence
The shorter-term data tracked by our market
model has seen noticeable improvement over the past two weeks. The longer-term
picture, looking out weeks and months, continues to be concerning. Therefore,
until more meaningful improvement starts to surface, our allocations will
continue to have a defensive slant.
