For a number of years we had been tracking, on a weekly basis, the WLEI. This is a leading economic indicator offered by the ECRI. Earlier this year we put it aside and started following the Atlanta FED Quarterly GDP estimates. With estimates again coming in around 2% GDP growth we decided to revisit the WLEI. Four weeks ago this leading index recorded its highest projected growth level in nearly 6 1/2 years, May 2010. Growth then was in the 3% to 4% zone. This indicator suggests a pickup in economic growth will likely occur in 2017. We will offer the weekly reading again on the SPX weekly chart.
Above from Tony Caldaro Elliot Wave newsletter. He has doubted this move and is as pessimistic as you get but his technical analysis says otherwise.
To ignore the strength of the consumer and actually believe we need another stimulus package is just plain pessimism with no backing. Core strength of our domestic economy is the service sector and exclusively the consumer. if we look at energy, exports, business spending and manufacturing we are struggling to maintain a positive bias. the thing of it is that thru the worse of it, China and Oil crash we have still maintained a slow growth. I can't see anything that would be much worse than the past 2 years in that regard. just look at your written assumptions one full year ago. Read it and dissect it for grading it's predictive powers. if your understanding of the future came close than by all means trust your analysis. if it consistently was way too pessimistic I suggest you figure out why.
I not only see no stimulus needed, I see talk of multiple rate hikes in 2017. Do you really believe the street has it wrong this time? Today, after a good number of companies reported, the street sees a 7 percent rise in 3 months based on corporate guidance. Now tell me corporations like to over promise or under?
I am not making any of this up. You can easily verify everything I presented and draw your own conclusions.
Sometimes we are our worse enemy. pretend we can see a parallel universe of ourselves. Step back and analyze your parallel self's assumptions on the economy and market. go back years. what do you see? If you had anticipated where we are today but see a major shift occurring now than by all means trust your gut.
I always look back at my assumptions to try to understand where I went wrong and why. if I can't figure out the "why" than I am clueless in trying to understand today let alone tomorrow.
Your bets have been pretty darn good, from what I have seen posted. I can only assume from that you separate your emotional pull from technical analysis of immediate action. I have a good grasp of macro Trends but obviously these last 6 months were not good on my betting prowess.
BTW, no talk of buybacks? Only when it's convenient to support the negative bias? A 5 year low in that regard. I guess people just find other parameters to latch onto when explaining the market distortion. I see high valuations in an ideal inflation free environment. Once real inflation thru real economic pickup starts it will be initially great for stocks but it will spell the start of the end in my mind. Credit concerns just don't happen in this low rate environment. Debit can be serviced and borrowing cheap. Wait till the "good times" roll in. Be careful for what you wish for. We has a long "Goldilocks" bull market scenario. 4 percent GDP will cause major problems in the future. 1 to 2 percent is just perfect here. I expect 4 percent will hit sooner rather than later.
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