Very strong ISM report today. It is suggesting the recovery is more and more solid. Usually the bull market rises further over the years when the economy gives such a reading in PMI. Shorter term however, the market corrects as the good news is generally already factored in and as the economy slows down for a while. I think this time around will be no different.
The chart below shows the PMI values from 1981 to today:
Note: the dates are approximations
In the past, the current level was associated to tops in the PMI. I checked the SPX chart for each instance and every time a correction followed.
2 comments:
Great post as usual, learn a lot!
so you think we are heading lower soon?
Tony
Yes Tony. I think as soon as next week.
The bearishness is already high though, but it can be flushed by a good employment report.
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