Some Economic Indicators May be Telling a Different Story

So here we are, it is Wednesday morning, and we are searching for answers as we examine data across a broad range of stocks, commodities, currencies and interest rates to understand the evolution of this correction.  Yes, I said correction...not the end of the world.

It was just a little over a year ago now when we were doing just the same thing.  At that time, the Hindenberg Omen was on the front page of almost every newspaper.  It was pure panic material as the indicator was predicting an impending crash.  Of course, that was last year, and chances are that time has dulled those memories, since they turned out to be totally wrong.

A year later...and here we are again.  A prominent report has been circulating and citing another crash indicator based on the Coppock Formula.  And if that doesn't send cold chills down your spine, we have ominous economic signals showing that Consumer Sentiment is at 57.8 - a low level that has only been reached three other times in the last 40 years.  Yet, if you look at those other times since 1970 that the Consumer Sentiment Index fell below a reading of 60, while those millions of people were headed for the shelter, a good investor should have headed for stocks.

Now, Mr. Market just loves to push us right on up to the edge of the cliff and make sure that we see how far down that chasm goes.  However, this morning, our Market Trend Analyzer (our "safety net") continues to tell us to follow our Asset Allocation Model (comprised of those indicators that focus on Investor Psychology, Monetary Liquidity and Stock Market Valuation), and that model continues to remain in a very bullish formation.

Don Hays

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