ISM Index Soars!
ISM index beat expectations by a mile today, turning in a surprising number of 48.9 from a consensus of 46.5. Investors bought into the good news pushing the Dow up another 115 points.
The ISM index or Institute of Supply Management Manufacturing Index is the first piece of heavyweight economic number out every month and it surveys purchasing managers in the manufacturing sector on their sentiments and outlook. This survey is so important because it has historically shown to lead real GDP. In fact, a reading of 50 is believed to be consistent with a real GDP growth of about 2.5%. As such, it does seem from the number that the US economy would be back in the green in the near future.
Yes, technical analysts like myself continue to be baffled by the sustained strength in the market at critically overbought resistance levels. Indeed, as the old saying goes, the market can stay irrationale longer than you can stay solvent. Even though the move was strong today, volume continues to be average and short term bullish momentum continues to fade. In fact, the S&P500 is aboe 1000 points again for the first time since Oct2008 and that has to be a strong resistance zone as well. As such, I continue to anticipate a technical pullback in the market this week no matter how the rest of the numbers turn out.
The ISM index or Institute of Supply Management Manufacturing Index is the first piece of heavyweight economic number out every month and it surveys purchasing managers in the manufacturing sector on their sentiments and outlook. This survey is so important because it has historically shown to lead real GDP. In fact, a reading of 50 is believed to be consistent with a real GDP growth of about 2.5%. As such, it does seem from the number that the US economy would be back in the green in the near future.
Yes, technical analysts like myself continue to be baffled by the sustained strength in the market at critically overbought resistance levels. Indeed, as the old saying goes, the market can stay irrationale longer than you can stay solvent. Even though the move was strong today, volume continues to be average and short term bullish momentum continues to fade. In fact, the S&P500 is aboe 1000 points again for the first time since Oct2008 and that has to be a strong resistance zone as well. As such, I continue to anticipate a technical pullback in the market this week no matter how the rest of the numbers turn out.
posted by Jason Ng at 7:08 PM
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