The point is that even when the market is showing good strength it is never good to chase a stock or ETF and the correction I expect should provide additional opportunities to buy closer to support. If instead stocks continue to rally higher over the near term, don’t chase them as the market is not yet totally out of the woods.
The German parliament approved the Greece debt deal last Friday, which should facilitate the disbursement of 44 billion euros. However, the Eurozone countries have delayed further debt relief as they have not worked out how to handle their Greek exposure to Greek debts.
The economic news was mixed last week with the S&P Case-Shiller showing another month of home price increases Tuesday while durable goods orders were better than expected, they weren’t great. Consumer Confidence was strong as it reached the highest level in over four years.
This was in contrast to the disappointing new home sales as there was a the large downward revision of the September sales data. The following day we got much better data on housing as pending home sales jumped over 5%. The GDP report also came in better than expected at 2.7%
More important might be last Friday’s Chicago PMI Report, which came in at 50.4, which reflects slight growth for the first time in two months. An interesting article in the WSJ discussed the Markit Flash PMI, which looks at all of US manufacturing. In its latest reporting period, it rose to 52.4. It showed an expansion in orders, unlike the Chicago report, and the chart suggests it may be a leading indicator for the Chicago PMI.
As I mentioned two weeks ago the deterioration in Eurozone industrial production was helping to push their GDPs into negative territory. Therefore it is more important now to watch the trend in the US industrial production and manufacturing for signs of weakness.
On Monday we get new data on the manufacturing sector with the ISM Manufacturing Index as well as the PMI Manufacturing Index. Wednesday we get the ADP Employment Report, Productivity & Costs, Factory Orders, and the ISM Non-Manufacturing Index.
Thursday we get the jobless claims and Friday we get the widely anticipated jobs report as well as the preliminary University of Michigan Consumer Sentiment survey for December. All of this data should make for an interesting week.
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