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America: Was November The Low?

It certainly was across all of the quantified metrics that I have in my notebooks. Historical facts are hard to fight.

Today’s market strength is based on this reality - the easiest leading indicator for momentum traders to understand is the most obvious one that they have to abide by – price. The US stock market is not trading on valuation, it’s trading on price momentum.

Inclusive of today’s +1.25% move in the SP500, the US stock market is trading +12.9% higher than the November low. The chart below shows what matters most to the USA’s GDP (non-manufacturing growth), and it too looks to have bottomed in November. This morning’s non-manufacturing ISM reading of 42.9 is what it is now, a historical fact.

On top of these economic readings, we had a better a much better ADP payroll number reported for January (vs. last month) at 522,000 vs. 659,000 in December, and we also had an improvement in the weekly ABC/Washington Post consumer confidence reading. Add these facts to yesterday’s pending home sales (December report), and you have a handful of metrics to wrestle with that are much better than where we were in America during the October/November Liquidity Crisis.

At the November lows, both America and the world stopped. Now, albeit with a cautionary yellow light, economic traffic is at least moving again.

Keith R. McCullough
CEO & Chief Investment Officer