Weighing the Week Ahead: Technical Danger Signals?

After a week of modestly strong data, what is next? This week has some second-level data, with the big news next week.  Expect plenty of action from technical analysts, who will wonder:

Do the charts suggest a new level of danger?

Last Week Recap

The housing news was OK.  Much attention was focused on the Senate version of the ObamaCare repeal.  That discussion will also carry over into the week ahead.

 

The Story in One Chart

I always start my personal review of the week with a chart of the price action.  The chart shows some swings, but the overall scale is very small.  Basically, nothing is happening to the overall averages.

Note to Readers

I am doing only a brief indicator update and a few thoughts on my weekend away.  Mrs. OldProf is already scolding me.

The News

Each week I break down events into good and bad. For our purposes, “good” has two components.  The news must be market friendly and better than expectations.  I avoid using my personal preferences in evaluating news – and you should, too!

The economic news last week was pretty good.  Home sales data beat expectations and initial claims continued at a very low level.  The only soft news came from the “newbie” PMI indexes.  Until further proven, I am paying little attention to these.

 

The Week Ahead

We would all like to know the direction of the market in advance. Good luck with that! Second best is planning what to look for and how to react.

The Calendar

It is a calendar with some interesting news, mostly setting things up for the big data in the following week.  I will be especially interested in personal spending and Michigan sentiment.

Fed speakers are out in force.  Expect more color on the reduction of the Fed balance sheet.

Briefing.com has a good U.S. economic calendar for the week. Here are the main U.S. releases.

Next Week’s Theme

The story has not changed much in the last few weeks.  We have covered most of the main themes in the last few installments:

  • Low volatility
  • Bonds versus stocks
  • Sector rotation
  • Various threats to growth

I expect plenty of articles on “newly discovered” recession indicators, the yield curve, the Hindenburg Omen, and other similar threats.

 

Quant Corner

We follow some regular featured sources and the best other quant news from the week.

Risk Analysis

I have a rule for my investment clients.  Think first about your risk.  Only then should you consider possible rewards.  I monitor many quantitative reports and highlight the best methods in this weekly update.

The Indicator Snapshot

 

The Featured Sources:

 

Bob Dieli:  Business cycle analysis via the “C Score.

RecessionAlert: Strong quantitative indicators for both economic and market analysis.

Georg Vrba: Business cycle indicator and market timing tools.

Brian Gilmartin:  All things earnings, for the overall market as well as many individual companies.

Doug Short: Regular updating of an array of indicators.  Great charts and analysis.

 

 

Final Thoughts

 

Last week I noted that I was not much concerned about the unwinding of the Fed balance sheet.  I explained more fully this week.  If you missed it, please take a look.  I’ll have more on this subject in the week ahead.

This will include some discussion of the ACA repeal legislation.

 

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