Jan 29, 2013 Consumer Confidence drop

The Conference board reported that consumer confidence in January dropped to lowest level since Nov. 2011. I find this interesting in light of the stock market nearing its all time high (S&P high was 1576 in 2007). Also in light of the rising retail sales numbers. Maybe fear brings about escape through spending. The stock market is up because the Fed keeps pumping cash into the system and keeps interest rates near zero. Also because there seems to be that bubble mentality brewing.

Look how the stock market used to move in tandem with confidence and how its now diverging dramatically.

Consumer confidence vs. SP500

Next look at how retail sales are strong yet confidence is weak.  The sales figure, however, lags the confidence I believe.

Consumer confidence vs. retail sales

And lastly here you can can see the historic consumer confidence levels for the past 6 years.  The top part of the graph is actual CC numbers and the bottom shows rate of change.  Now it has obviously turned negative and is accelerating to the downside in velocity but will it really plunge or bounce up from here?  Who knows, but it will be interesting to see if next month shows a trend.  Also there are several measures of this, we have to see if they all confirm.

Conference board consumer confidence

Update 2/1/13

The Univ. of Michigan consumer confidence came in at 73.8 up from 72.9 in Dec.  so go figure… Amazing how these different polls vary and who knows which one to trust.  Also today, the unemployment rate rose to 7.9% but more importantly only 157,000 jobs added which is pretty weak.  On the other hand the total added jobs for 2012 was increased up 335,000

SP 500 at 1/18/13

The S&P appears to be on its way toward 1576, the high in 2007. Looking at the daily and weekly charts, everything is pointed up and now that it took out resistance at the Sept. 2012 highs, and the debt ceiling issue has been put off for 3 months, or appears to be… I don’t see much to stop it. The ADX is not in overbought territory so there most likely wont be a pull back for a while yet.

S&P chart

And on a weekly basis all indicators are pointing up, what appears to be the beginning of an uptrend. I would not want to be short the mkt here. Definitely not overbought territory.

sP chart