I had a look at the PMI Data of the US and it is not supporting a positive US economy. This would answer why the FED has been reluctant to raise the interest rates even when economist expect them to do so to prevent the next bubble due to low rates.
For the past 6 months, the ISM Non Manufacturing data has been steadily dropping and the latest data printed a 53.4.
The ISM Manufacturing one the other has dropped below the 50 for the 4th consecutive month. This is not a good sign for an economy which the FED says is recovering. Though both ISM dat’s are just surveys of purchasing manager and some may argue it does reflect the real situation as the data only reflects the number of people saying conditions are better compared to the number saying conditions are worse. It does not weight for size of the firm, or for the degree of better/worse. It can therefore underestimate conditions if there is a great deal of strength in a few firms. I still have a view that a steady drop in its value would mean that things are not that rosy overall for the 12 months.
Even the Chinese PMI does not support a strong overall economy. Back 2008, we had China help support the world economy but this time around, things might be different. The Chinese themselves are also facing 4 months of data below 50.
Yesterday we had the rejection of the 2050 area in the SPX. So lets see if this is the top of the market. I have not detected heavy selling as yet. So stay tuned. My long term view is still a sell SPX from high’s.