The “Heat Map”

Posted on July 25, 2016 by The Weekly Commentary

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

CONSUMER SPENDING: This grade is A- (very favorable). Favorable activity in the housing market continues to support growth in the level of spending.

THE FED AND ITS POLICIES: This factor is rated A (very favorable). Economic reports indicate the U.S. economy is improving. The FED meets this week and we will obtain a glimpse of their current thinking.

BUSINESS PROFITABILITY: This factor’s grade is a C- (below average). During the upcoming month, corporations will release their second quarter corporate-earnings reports. We will monitor this closely for possible upgrade.

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 4. These risks deserve our ongoing attention.

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