![\"Real](\"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2018\/2019-01-04-realgdp.png?w=525&ssl=1\")
<\/p>\nThe US economy continues to show signs of robust good health.<\/p>\n
Total hours worked are rising, signaling healthy real GDP growth.<\/p>\n
<\/p>\n
Growth in average hourly wage rates is rising, reflecting a tighter labor market. Underlying inflationary pressures may be rising but the Fed seems comfortable that this is containable.<\/p>\n
![\"Average](\"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2018\/2019-01-04-wagerates.png?w=525&ssl=1\")
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The Leading Index from the Philadelphia Fed maintains a healthy margin above 1.0% (below 1% is normally a signal that the economy is slowing).<\/p>\n
![\"Leading](\"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2018\/2019-01-04-leading.png?w=525&ssl=1\")
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But market volatility remains high, with S&P 500 Volatility (21-day) above 2.0%. A trough above 1% on the next multi-week rally would confirm a bear market \u2014 as would an index retracement that respects 2600.<\/p>\n
![\"S&P](\"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2018\/2019-01-04-spx.png?w=525&ssl=1\")
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The Nasdaq 100 is undergoing a similar retracement with resistance at 6500.<\/p>\n
![\"Nasdaq](\"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2018\/2019-01-04-ndx.png?w=525&ssl=1\")
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The primary disturbance is the trade confrontation between the US and China. There is plenty of positive spin from both sides but I expect trade negotiations to drag out over several years \u2014 if they are successful. If not, even longer.<\/p>\n
I keep a close watch on the big five tech stocks as a barometer of how the broader market will be affected. So far the results are mixed.<\/p>\n
Apple is most vulnerable, with roughly 25% of projected sales to China. Recent downward revision of their sales outlook warns that Chinese retail sales are falling. AAPL is testing its primary support level at 150.<\/p>\n
![\"ASX](\"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2018\/2019-01-04-aapl.png?w=525&ssl=1\")
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Facebook and Alphabet are largely unaffected by a Chinese slowdown, but have separate issues with user privacy. Facebook (FB) is in a primary down-trend.<\/p>\n
![\"ASX](\"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2018\/2019-01-04-fb.png?w=525&ssl=1\")
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While Alphabet (GOOGL) is testing primary support at 1000.<\/p>\n
![\"ASX](\"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2018\/2019-01-04-googl.png?w=525&ssl=1\")
<\/p>\n
Amazon (AMZN) is similarly isolated from a Chinese slow-down although there may be a secondary impact on suppliers. Primary support at 1300 is likely to hold.<\/p>\n
![\"ASX](\"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2018\/2019-01-04-amzn.png?w=525&ssl=1\")
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Microsoft (MSFT) is the strongest performer of the five. Their segment reporting does not provide details of exposure to China but it appears to be a small percentage of total sales.<\/p>\n
![\"ASX](\"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2018\/2019-01-04-msft.png?w=525&ssl=1\")
<\/p>\n
The outlook for stocks is therefore mixed. Be cautious but try to avoid a bearish mindset, where you only see problems and not the opportunities. Even if China does suffer a serious slowdown we can expect massive stimulus similar to 2008 – 2009, so the impact on developing markets and resources markets may be cushioned.<\/p>\n
Best wishes for the New Year.<\/p>\n","protected":false},"excerpt":{"rendered":"
The US economy continues to show signs of robust good health. Total hours worked are rising, signaling healthy real GDP growth. Growth in average hourly wage rates is rising, reflecting a tighter labor market. Underlying inflationary pressures may be rising but the Fed seems comfortable that this is containable. The Leading Index from the Philadelphia … <\/p>\n