The current bull run, as captured in the weekly chart, remains intact. SPX The market is at a 10%
price premium to its 40 wk m/a and remains moderately overbought. For reference value only,
note that the SPX eclipsed the 40 wk m/a by 14% in late 2009 and by 12% in early 2011.
Weekly Cyclical Fundamental Indicator (WCFI)
The WCFI remains in an uptrend which started in mid - Nov. '11. The range of positive markers
within the indicator composite has steadily broadened out, but the momentum has gone flat. One
reason is that weekly unemployment insurance claims have leveled off following several months
of sharp improvement (not an abnormal development), and the other reason concerns the flattening
out of the sensitive materials price composite. JOCIINDX It is worth noting that this index is a
multi - currency measure with global application. I mention this because the index has lost positive
momentum here in Mar. during a normally seasonally strong time with this development a
reflection of trader handicapping of indications of a further slowing of industrial output in China,
normally a huge buyer of industrial commodities over the first half of the calendar year. This is
the first "heads up" I've had on the WCFI for a good several months.
Federal Reserve Liquidity Sponsorship
Fed. Bank Credit and the monetary base have been contracting here in Mar. as the Fed has
reduced the currency swap line with the ECB and other needy central banks. The stock market
has advanced so far this month, but players have been very sensitive to the Fed's QE capers over
the course of the current cyclical bull.
- Peter Richardson
- Retired chief investment officer and former NYSE firm partner with 50 plus years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!