fusion research - chart book for august19th 2013

7/27/2019 Fusion Research - Chart Book for August19th 2013

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Fusion Chart Book8/19/2013


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Summary

U.S. markets have come off a bit in the past few sessions as goodnews has become bad news. With

the historically slippery months of August and September looming, budget debates in the foreground,

combined with less than stellar market internals, we can see how sellers have had itchy trigger fingers

of late. Fears of the fed leaving the party early have been cited most often as the reason behind the sell-off.

As we examine some charts below, especially the economic charts, there may be some rationality to this

line of thinking as the real economy has not responded as well as domestic equity markets over the last

few years. As evidence we cite our slides on pages 8, 9 & 10 which illustrate the following; leading

economic indicator growth has virtually flat-lined for several years, credit growth is still non-existent,

while shipments and inventories still remain at a standstill, suggesting real economic activity is sluggish.

That said, we believe the current market weakness is just a correction of the excesses of the recent

market rally. We believe the data points we have illustrated suggest the fed will stay around for a

while longer. As the market grasps this concept we think the correction will abate and the market can

rally into year end.


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S&P 500 Index (SPX) - Daily Chart

The S&P 500 broke below support (red line) and now sits on

its last uptrend line (green dotted line). A modest bounce

could occur here, however, it appears it would be shallow

given poor market internals and seasonality trends. The

uptrend line (orange line) comes into play near 1,630.


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Thomson Reuters/Jeffries CRB Index (CRB) - Weekly Chart

Commodities prices have stabilized and worked back

above a downtrend (red line). Upward pressure fromcommodities could be dampen growth.


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Continuous Crude Oil Futures - Monthly Chart

Crude Oil broke out above $ 99 and ripped to $ 110. This is a key area as it represents big

resistance (red band and arrows). Keeping crude under this level is crucial as a breakoutwould imply $ 120, which would certainly be a drag on the recovery.


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10 Year Treasury Yields - Daily Chart

10 year yields continue to push higher


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Bloomberg REIT (BBREIT) & Philadelphia Utility Index (UTY) - Daily Charts

REITs (green line) and Utilities

(red line) have fared worse

than other market sector as

rates have risen. Whileoversold in the near-term, the

technical damage suggests

lower prices are likely to

follow any bounce.


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LEI YoY - Monthly Chart

LEI YoY growth has been paltry for last several years (red band).

In fact, since 2009 to 2010 it has been down to flat.


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Conference Board Leading Credit Index - Monthly Chart

Access to credit is an economic stimulant. As seen in this Leading Credit index

chart which includes components such as; Senior Loan Officers C&I loan

survey, Bank tightening Credit to Large and Medium Firms (quarterly), and

Security Repurchases (quarterly) from the Total Finance-Liabilities section of

Federal Reserves flow of fund report credit availability is still dead !


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Cass Freight Shipments & ISM Business Inventories - Monthly Charts

2000 - 2001 2007 - 2008

While there is no inventory back

up (green line) there hasnt been

any uptick in shipments (orange

line) either.

fusion research - chart book for august19th 2013

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