Business News

US economic data on the improve

| More

by Peter Switzer

Gradually the doomsday merchants are being proved wrong with company earnings continuing to beat expectations — even the housing sector kicked in to provide more reason for optimism.

The Dow was up 100.81 points to 10,525.43 while the S&P 500 put on 1.12 per cent to 1115.01. This close broke the 200-day moving average to the upside which is the kind of thing chartists would say is a good sign.

Watch the outlook statements

Overnight, FedEx added to the positive view of GE’s chief executive, Jeff Immelt, who painted a positive picture of the US economy going forward.

Remember, many of the economic readings that have spooked markets have been either monthly numbers or backward-looking snapshots on the US economy.

So far, many of the top US companies have put out favourable outlook statements.

Positive economic data

On the economics front, new housing sales spiked 23.6 per cent in June and the stock of unsold new homes registered a 42-year low.

Another positive sign was the fact the market was taken higher by consumer discretionary and industrial stocks.

Overall, good news is building with even the European PMI coming in strongly and UK economic growth rising more than expected. Clifford Bennett from Herston Economics argued on my Sky News Business Channel program that the Eurozone is much stronger than most people think and the data is starting to prove that point.

Market tests

Over the next two weeks, the market will be tested and if the economic data in the US can pick up, like today with new home sales, then this rally will kick on.

Remember my favourite trading cliché: “The trend is your friend until it bends!”

(On Thursday night on my Sky News Business Channel program I will have Lance Lai, my charts guy, tell us what the trends are telling us. And tonight I have one of the country’s scariest economists — Associate Professor Steve Keen from UWS, who won an award in the US for predicting that debt would create a GFC.)

For advice you can trust, contact Switzer Financial Services.

Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

The Switzer Super Report is a newsletter and website for self managed super funds. With exclusive commentary from Peter Switzer and Paul Rickard the Switzer Super Report will help you maximise your after tax investment returns and grow your DIY Super. Click here for a free trial or subscribe today.

Published on: Tuesday, July 27, 2010