After sliding about 5% over the last four weeks, and then recovering a couple of percentage points, the S&P500 still sits only about 3% below its all-time highs.
Two economic reports that form the core of our Simple Rule were released last week. While both reports suggest that the US economy is weakening over the last month, these reports are still suggesting that the US economy is growing. In addition, the remaining economic components of our Simple Rule also suggest that the US economy is not contracting.
Since all of the economic components of our Simple Rule are showing expansion, the investment signal is still bullish…for the S&P500 index as a whole.
We update the economic reports in our Simple Rule on a monthly basis, and until the economic reports begin to show contraction, we will submit summary comments on the US equity markets only once a month. Until the economic reports that we follow turn down, more frequent analysis would not materially affect our position on the US equity markets.