INDICATOR INSIGHTS
Monthly Update
CATEGORY
Market Sentiment/Risk MO. END % CHANGE LEVEL
Fear & Greed Index (Market sentiment) 28 -38 Fear
VIX (S&P 500 Volatility measure) 17.1 +3.6 Neutral/increasing
MMRI (Risk measured by interest rates) 306 +31 Extreme high risk
U.S. 10yr-bond yield 4.53 +35 Bearish
Fear & Greed Bitcoin 70 -11 Greed
CSI (Consumer Sentiment) Even No change Neutral
U.S. Economy UP/DOWN LEVEL
LEI (Overall leading indicators) Down Bearish
GDP (Gross Domestic Product) In-line Neutral
ISM/PMI (Producers Manufacturing Index) Down Bearish
CPI (Consumer Price Index) Up slightly Bearish
(Minus Food & Energy) In-line Neutral
JOLTS (Unemployment categories) Increase Bearish
ADP (Jobs – non-farm payroll added) In-line Neutral
(Initial and continued claims) Up Bearish
Transports (Shipping, durable goods orders) Down Bearish
Real Estate (Housing starts) Even Neutral
(Total Construction Public/Private) Down Bearish
Mortgage demand Down Bearish
Personal Consumption/Retail Spending Even Neutral
Business Activity Down Bearish
*This section updated on December 31, 2024
**LTE = Lower than expected (bearish) / HTE = Higher than expected (bullish)
***We may not present the most recent numbers (often revised, and unreported in the mainstream media). Actual figures and charts can be found on the internet, including the FRED (Federal Reserve Economic Data) website.
Price Action UP/DOWN LEVEL
RSI (Relative Price Strength) Down Bearish
PCR (Put to Call Ratio – 5 day avg) Up slightly Bearish
ADL (Advance/Decline line) Down Bearish
MFI (Money Flow Index) Up Bullish
Institutional Trading Down Slightly Slight Bearish
Commodities MO. END % CHANGE LEVEL
Gold to Silver Ratio 89.7 + 2.9 Slight higher silver bias
Crude Oil 71.79 +3.64 Neutral but increasing
As introduced in Chapter 3 of our publication When to Buy and When to Sell: Combining Easy Indicators, Charts, and Financial Astrology (available on Amazon), there are several “leading indicators” that go largely unnoticed and under-utilized by the average beginner or intermediate investor. Some of these indicators measure human emotion and market sentiment that often determines shorter term price action, while others uncover the true conditions of the economy, institutional buying and selling, and risk levels.
In our monthly “Indicator Insights” blog (first weekend of each month) we report the previous month-end levels (pertaining to the U.S. economy and/or the S&P 500) regarding several of these easy-to-read gauges we discuss, as well as others, to provide a quick-guide for our readers, with periodic analysis when necessary. Our monthly updates in this blog section include several market psychology related gauges, including the S&P 500 Fear & Greed index updated level, although there will be no commentary, as we dedicate an entire separate weekly blog to that indicator.
In the last edition at the end of November, we noted that many of the U.S. economic indicators we track had leveled off to neutral, though several continued to remain bearish. Economic reports in the month of December have continued that theme in categories including housing starts, inflation, revised GDP (of course), and manufacturing. During this holiday season, there were record online sales reported despite record credit card debt, decreasing mortgage applications, and rising property defaults, as households are struggling to pay the bills. Those who can still afford to high-end shop skew the numbers (although a reduction in “luxury item” was reported this month), and are purposely combined to mask the reality of how many individuals are affected by rising prices. Holiday always lifts the retail sales industry as families need to provide some type of gift giving. As we have repeatedly mentioned in the past, some of these reports are often revised downward, so don’t be surprised if that is the case once again.
“Readings of note” this month includes a significant decrease in mortgage applications. Although the last two weeks of any year are generally slower, due to the distraction of the holidays, there was a 22% drop in applications from the previous month. Slowly, but surely, the increased pressure on the consumer appears to be hitting the real estate sector. Currently, 6.3% of mortgages are delinquent (contradicting the government report of much less), and an increasing number of monthly rents are behind. Many more jobs were also lost over the past month, which will put even more pressure on these figures.
The second is the continued issue of a fragmented/distorted equities market, that have been boosted only by the large cap “mega” stocks, known as the Mag 7. These stocks, which include Amazon, Apple, Google/Alphabet, Tesla, Nvidia, Meta, and Microsoft, continue to hold up the market, despite the fact that very few others are making highs in the current cycle. The ETF MAGS reflects these leading stocks, while the ETF RSP reflects the “equal weighted” S&P 500, which has been severely lagging. The Advanced-Decline Line (ADL) also symbolizes weak internals to the market, making it very fragile, and volatile, which we have experienced.
As mentioned during the past few months, the markets also continue to be propped-up artificially, between signs of the government buying its own debt, military conflict spending, and interest rate/bond manipulation. The wild daily price swings returned in December, and will likely continue for the most part. Traders should always be attentive to indicators like ATR and volume, as tight stop losses may be prematurely triggered with these temporary spikes or declines in price. Remember to keep your stop-loss orders mental (not in the system), and also set some cash aside to take advantage of lower asset prices in the future, in the event “panic” sets in due to uncertain global conditions.
***As always, this information is not intended to be financial advice, or any specific buy or sell recommendation, but rather a guide to assist the reader in some further understanding of current economic conditions.
