Stock Market Prediction Algorithm
The Bulls, in the stock market prediction algorithm, were helped this week by the TICK. This is the first time that the TICK has contributed to the stock market prediction algorithm in many months. The TICK is what we use to track institutional investor behavior. On Friday, institutional buying was detected with a slight advantage going to the Bulls because more of the buying took place in offensive sectors instead of defensive sectors.
Federal Reserve Tapering
Some in the mainstream financial media are saying that Federal Reserve tapering can’t be responsible for the sell off in 2014 because the Fed announced what they were going to do in December 2013. That’s horrible logic. Using that logic, one could argue that because the short term capital gains tax was raised, investors would have sold in December on Fed tapering but instead held on so that they could qualify their investments as long term and be taxed at 15% instead of 28.6%. Silly, right? The market is pricing in the future anywhere between 3 and 9 months out. Maybe the market didn’t sell off in December because it priced in 1 or 2 tapers but maybe 3 tapers are going to crash the market because market participants will see the Fed’s tapering as being too quick in relation to the poor economic data that’s coming out. If Fed stimulus made the stock market go up, then the Fed taking away that stimulus will make the market go down. It’s that simple. You can’t have one side of that equation without the other. Anything else shows a bias. Don’t over think it. The only way the market would not go down is if something else stepped in (the economy) and took the Fed’s place. With the poor economic reports, we know that’s not happening yet.
Stock Market Prediction 2014
The stock market prediction for 2014 is down. I don’t see anything over this last week that changes that prediction. In fact, with the snow storms in the East and the poor economic reports last week, the down stock market prediction for 2014 looks more accurate than ever.
Stock Market Prediction Software
New Fed Chair Janet Yellen is the new variable we will need to learn to read and quantify. What words does she use about the economy? Is she going to be as dovish as everyone thinks? It’s too early to know what impact the new Fed Chair Janet Yellen will have on our stock market prediction software but we will be watching her closely. Next week we will have the opportunity to do that when she testifies before Congress for the first time.
The major fundamental analysis reports of last week were: Monday’s ISM Manufacturing Index, Thursday’s Jobless Claims, and Friday’s Employment Situation.
The ISM Manufacturing report signaled a very significant slowing in growth for January, at 51.3 for a sharp 5.2 point decline from December. This is the lowest reading since May 2013 and the sharpest monthly drop since May 2011. There was a big drop in new orders which are down a very steep 13.2 points to 51.2. This is one of the largest monthly declines on record.
A look at initial jobless claims points to improvement. Initial claims for the February fell a sharp 20,000 to a lower-than-expected 331,000. The 4-week average, at 334,000, is trending 15,000 below the month-ago comparison. Continuing claims, however, are not showing improvement. Continuing claims for the January 25 week rose 15,000 to 2.964 million with the 4-week average up 26,000 to a 2.986 million level that is more than 100,000 above the month-ago trend.
The employment situation disappointed again on the payroll side. Total payroll jobs in January rose 113,000, following a revised increase of 75,000 for December and after a revised rise of 274,000 for November. Expectations were for a 181,000 boost. The net revisions for November and December were up 34,000. Private payrolls advanced 142,000 after rising 89,000 in December. The consensus called for a 182,000 gain in January.
The unemployment rate dropped to 6.6 percent from 6.7 percent in December. The labor force actually rebounded a sharp 523,000 in January after dropping 347,000 the month before. Household employment spiked 638,000, following a 143,000 rise in December.
The fundamental analysis reports with the greatest probability of moving markets next week are:
Tuesday, Feb 11 = Janet Yellen Speaks
Thursday, Feb 13 = Jobless Claims, Retail Sales
Friday, Feb 14 = Industrial Production