Overview
Bank of America’s (BOA) real-time Q3 GDP tracker is running well ahead of expectations, so their economists now see more robust growth in 2022 and no recession till the first half of 2023. The BOA finding provided context to the upward revision (to -0.6%) of the initial -0.9% decline in the Q2 GDP estimate. The Atlanta Fed’s GDP now is currently at +1.3%. These are consistent with strong ISM Services data earlier in the week. (The next GDP data release is set for Sep 29.)
A strong economy will motivate the Fed to persist with its rate-tightening regime. But, as Fed Governor Waller puts it, he wants to see “… a meaningful and persistent moderation of the rise in core prices…”. I take this to mean a decline lasting longer than eight months and PCE below 5%.
As we have discussed, the cost of shelter dominates the CPI, and it takes more than six months before lower rents seep into the CPI calculation. The most recent data show that rents may have peaked, but the CPI shelter costs do not yet reflect those declines.
Performance Summary
The S&P-500 index found support at the top of the range we highlighted last week. The bounce was strong and took the benchmark back up towards 4088. However, some bears continue to call for rapid declines of 20% from here.
Even the sensitive net bull/bear balance ended the week in positive territory. However, it is well below the reference threshold of +60.
We have two key events on the calendar: the CPI report next Tuesday and the FOMC meeting the following Tuesday. A positive CPI report and a 75-bps rate hike would help the uptrend continue. However, the post-meeting news conference could well unsettle traders.
Where the Trends Are
This week I explored the NASDAQ universe for the stocks with high volume and trend strength. The list (courtesy of MetaStock) is shown below. It has, for example, First Solar (FLSR) and Enphase (EHPH) that we have discussed over the past few weeks. There is plenty of volume in these stocks, so execution should pose no problems.
Wrap-up
My posts should give you a good starting point, with context and suggestions if you like to research. Then, you can visit my website, chandeindicators.com, for more information and ideas. I hope you stay tuned and help by subscribing and recommending it to your friends and colleagues.
Thank you for spending some time with me.
Disclaimer
And now for some housekeeping. This publication is for “edutainment,” education, and entertainment, not for investment advice. Past performance is not necessarily indicative of future results. Our disclaimer at chandeindicators.com is included herein by reference.