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Five Things You Need to Know: Consumer Confidence, Market Speaks (Few Listen), Counting September, US Finishes Strong 6th in World Competitiveness, Tiny Bubbles?


What you need to know (and what it means)!


Minyanville's Five Things You Need to Know to stay ahead of the pack on Wall Street:

1. Consumer Confidence

The only bit of potentially market moving economic data out this morning was the Conference Board's Consumer Confidence survey.

  • The Conference Board's Consumer Confidence Survey came in at 104.5 for September from 99.6 in August, slightly above expectations of 103.
  • Inflation expectations remain "well contained" down to 4.9 vs. 5.5 in August.
  • The cutoff date for September's preliminary results was September 19th.
  • A couple of interesting nuggets:
    - The proportion of consumers anticipating their incomes to increase in the months ahead rose to 19.7 percent from 17.9 percent.
    - Those anticipating business conditions to worsen decreased to 10.6 percent from 12.9 percent.
  • Overall, however, although the index came in above expectations (perhaps largely due to a significant easing in gasoline prices), it has moved back to May's 104.7 level, well below the 105.4 level in June and July's 107 level.
  • An interesting 2002 study by Kenneth Fisher of Fisher Investments and Meir Statman found that "There is a positive and statistically significantly relationship between S&P 500 Index returns and changes in consumer confidence, and the relationship between S&P 500 Index returns and changes in the expectations component of consumer confidence is especially strong."
  • The expectations index in September rose to 89 from 84.4 last month.

2. Market Speaks, Few Listen

Yesterday afternoon we ran across an interesting article on Dr. Brett Steenbarger's site on what new highs and lows in the stock market may be telling us.

  • Dr. Steenbarger took a look at new highs and new lows in the market to see what, if anything, they may be telling us.
  • The comments below, stood out:
    "[A] market with relatively high new highs *and* relatively high new lows is frequently a market in the process of topping. The new highs reflect the strong stocks that are taking the broad averages to new price highs, but the new lows reflect underlying weak sectors that eventually drag down the broader market. A rising tide is supposed to lift all boats. If some boats remain underwater, one must question the strength of the tide."
  • As Dr. Steenbarger noted, it is important to "examine, not just what market indices are doing, but what is happening among the majority of individual stocks. Many times, the market index is less than the sum of its parts."
  • Another measure of market breadth is what are called stock index bullish percents.
  • These can be useful tools to help see what individual stocks in an index are doing since the majority of stock indexes are capitalization-weighted and therefore give the most weights to the largest stocks in the index.
  • Stock index bullish percents give each stock one vote.
  • As Dr. Steenbarger noted with respect to new highs and new lows, a mixture of both can suggest a market in the process of topping.
  • Similarly, when stock indexes rise on fewer and fewer stock participation over time, this too can suggest a market that is topping.
  • In fact, this is precisely what the bullish percent indicators for every index are telling us.
  • As a measure of net breadth, fewer and fewer stocks are participating in the moves of the underlying indexes going back to 2004 despite the moves recently toward new highs.
  • This is true for the Nasadaq-100, the Nasdaq Composite, the S&P 500, the S&P 100, the Dow, the Russell 2000, the S&P MidCap 400 and the S&P SmallCap 600, which are the primary bullish percent indicators tracked by Investor's Intelligence.
  • An interesting thing to consider is whether tops are proportionate to the time spent making them.
  • In other words, does the length of a negative divergence say anything predictive? As mentioned above, there have been negative breadth divergences in the bullish percents versus the index price since January 2004 for all indices.

3. Counting September

Question: When the S&P 500 makes a high for the calendar year in September, what has happened over the past 30 years in October and the fourth quarter?

  • We put this question to Minyanville Professor Jason Roney for some quick counting. Here's what he found:
  • Ok, but what if the S&P 500 made a new high for the week after the September expiration? What happens in October and the fourth quarter then? Again, going back 30 years:
  • Is that what you expected?

4. U.S. Strong 6th in World Competitiveness

The United States placed a strong sixth in the World Economic Forum's 2006 global competitiveness rankings, according to

  • Switzerland was deemed the most competitive economy in 2006, followed by Finland, Sweden, Denmark and Singapore, the report said.
  • After the U.S., Japan, Germany, the Netherlands and Britain rounded out the top 10.
  • Of course, the America-hating headline writers had a field day with this one. "U.S. falls to 6th in world competitiveness," one screamed. "US economic competitiveness falling, World Economic Forum says," another pointed out.
  • Look, people, we can't be number one in everything. It's impossible.
  • You don't see Jeff Gordon out there kicking field goals for the Baltimore Ravens, do you?*
  • Look, America is number one in (a) shopping, and (b) whoopass, and if you don't believe that prepare to find out about (b) as soon as we finish paying for these shoes.
  • Meanwhile, headline writers conveniently left out the "supposed" top two "threats" to U.S. shopping and global whoopass dominance: Russia and China.
  • So how did Russian and China fare in the Global Competitiveness contest?
  • Russia checked in at 62nd place. 62nd place! China finished 54th!

5. Tiny Bubbles?

In addition to placing a strong sixth in global competitiveness, the United States leads the world in nanotechnology research, a feat that probably goes unrecognized simply because it is invisible to the naked eye.

  • According to an assessment of the National Nanotechnology Initiative done for Congress, the U.S. leads the world in nanotechnology research, the New York Times reported.
  • The National Research Council's report on the National Nanotechnology Initiative noted that because nanotechnology was a foundation technology that makes other innovations possible, the research spending could logically be compared with early investments in computing and communications technology, whose influence took 20 to 40 years to become apparent, the Times article said.
  • Nanotechnology is a field of applied science that focuses on the design, synthesis and processes used to manipulate atoms and small clusters of molecules measuring from 1 to 100 nanometers, or billionths of a meter.
  • The report noted that nanotechnology can be expected to have a tremendous economic impact in the decades to come but concluded that safety research is underfunded and warned of new safety risks that the technology may produce that are still little understood.
  • Were you even possibly aware of it?
    Natural particles often have far different qualities and capabilities on the nano scale. Gold, for instance, though chemically inert at a normal scale is a quite potent chemical catalyst on a nano scale. - From
  • A key social concern over nanotechnology relates to military and government applications.
  • Some paranoiacs fear nanotechnology may one day make it possible for a government to secretly spy on its citizens by, say, illegally eavesdropping on their phone conversations or infiltrating domestic groups it believes are "suspicious" without either probable cause or a warrant.

    Below, an example of nanotechnology in action:

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