Chart of the Day

Just a quick sidebar to my latest weekly outlook on Seeking Alpha:

It’s difficult to make a bearish case on the US economy when corporate profits are strong and trending up. Another very good signal for the business climate is C&I loans. We have heard that banks weren’t lending, and businesses didn’t want to borrow anyway. That’s not what the data in this chart show:

With C&I lending turning up, we can expect business profit outlooks to be favorable. Say what you want about corporate executives, but they wouldn’t be borrowing if they didn’t see opportunities to invest and grow their businesses. That’s a very good sign.

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2 thoughts on “Chart of the Day

  1. Hello Harry,

    This has nothing to do with your chart, but I wanted to comment on the general market. If support doesn’t hold today, the SPX will fall back into base, a failed base on base. SPX’s low today is 1342.27. Feb 18 high was 1344.07.

    And I am not sure what is going on with the Elliot Wave count. It will sort itself out.

    Although you do not follow IBD, I still make the contention that this is a 4th stage base, which may account for the bullish weakness.

    Thank you for letting me comment.

    Aloha,
    Shirley

  2. Hello Shirley,

    Thank you for your comments. While I don’t follow the O’Neill system of chart interpretation, I do have a great deal of respect for the work IBD does, particularly on the fundamental side.

    The action we are seeing in the markets this week appears to confirm to some degree the outlook expressed in my most recent SA article: commodities are rolling over. In the stock market, we need to drill down to look at what is happening with different sectors, and we can see that the commodity related stocks (energy, mining & materials) are selling off, while other sectors like tech and consumer goods are holding up well. CVX, XOM and CAT alone are responsible for nearly all of the losses in the Dow Industrials.

    Internationally, we see the same theme: weakness in the BRICs, Canada and Australia, relative strength in Japan, Germany, some of the Global Titans.

    What I will be looking for is whether this is a pullback and buying opportunity in the commodity sectors, or a full on commodity rout. Over the weekend I will be trying to identify support points. As usual I will be looking at currency and bond yield data as well. It has been difficult to find time for analysis as I have added a teaching assignment to my regular workload, but I am committed to keeping up the effort.

    Regards
    Harry

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