Most of the time the U.S. stock market looks to 3 factors (call them the “pillars” that support the stock market) to support its upward trend – let’s grade each of the pillars.

CONSUMER SPENDING: This grade is a B- (slightly favorable). This is a downgrade from B. This month’s retail sales was disappointing. Time will tell whether it is a beginning of a trend or a one-time aberration.

THE FED AND ITS POLICIES: We continue to grade this factor an A+ (extremely favorable) because the FED cannot do much more than it is doing to support the stock market and asset prices.

BUSINESS PROFITABILITY: This factor’s grade is a C (average). This is a downgrade from B-. We had been tolerant of weak earnings, but with the possibility of a Fed hike approaching, we are becoming less forgiving.

OTHER CONCERNS: The “Heat Map” is indicating the U.S. stock market is in OK shape ASSUMING no international crisis. On a scale of 1 to 10 with 10 being the highest level of crisis, we rate these international risks collectively as a 5. This is an increase from 4 due to uncertainties in China. These risks deserve our ongoing attention.