Sunday, October 28, 2018

Charting Last Week (10/22/18 - 10/26/18)

The U.S. Bureau of Economic Analysis (BEA) announced on Friday the first estimate of GDP for the third quarter of 2018. GDP grew at a 3.04% year over year rate (3.50% QoQ). The North Star GDP Estimate for the fourth quarter is 2.34% year over year growth (2.24% QoQ). The North Star GDP Forecast for the first quarter of 2019 is at 2.30% year over year growth (2.05% QoQ) down from 2.40% last week. The GDP Forecast page on the tab above is updated periodically during the week.
It was an ugly week for stocks. The S&P 500 (SPY) was down 3.99% for the week. The market is starting to worry about earnings growth. However, analysts are raising their earnings estimates. According to Factset, for Q3 2018, the earnings growth rate is at 22.5% year over year. This is up from estimates of 19.3% in September. The Fed Funds futures are now implying a 70.3% chance of one more rate hike in December (down from 83.9% last week) according to CME Group's FedWatch tool. The charts below show the normal trading ranges for various indices for the last six months. The red (or green) area indicates 2-3 standard deviations above (or below) the normal 21 day trading range. The gray area indicates 1-2 standard deviations above (or below) the normal 21 day trading range.
The Leading Indicator for International Developed Markets (EFA) decreased by 0.08% percentage points to 0.81%. The Leading Indicator for International Emerging Markets (EEM) is at 4.42%. On the chart below, you can click on the blue and red buttons to see the Leading Indicator growth rate and an ETF for each country.  
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These charts have limitations. Economic data is often revised after the fact. The market is forward looking and anticipates future events. The unexpected can and will happen. The market is continually changing. The conditions of the past are different from the present. Past performance is not an indication of future performance.