The Stock Market Is Going Up. Separate The Signal From The Noise

There has been a lot of noise over the past week. “Turkish contagion”, “crashing commodity prices”, “weakness in emerging markets”, etc.

As U.S. stock market investors and traders, our job is to separate the signal from the noise.

As always, the economy’s fundamentals determine the stock market’s medium-long term outlook. Technicals determine the stock market’s short-medium term outlook. Here’s why:

Let’s go from the long term, to the medium term, to the short term.

Long-Term

Heavy Truck Sales are still trending higher. This leading indicator trends downwards before economic recessions and equity bear markets begin.

Housing Starts and Building Permits are still trending higher (despite a recent dip). These leading indicators trend downwards before economic recessions and equity bear markets begin.

Initial Claims and Continued Claims are still trending downwards. These leading indicators trend upwards before economic recessions and equity bear markets begin.

Inflation-adjusted Retail Sales are still trending higher. This leading indicator trends downwards before economic recessions and equity bear markets begin.

The Delinquency Rate on all loans are still trending downwards. This leading indicator trends upwards before economic recessions and equity bear markets begin.