Timing Outlook Remains Positive

The Outlook remains in positive territory for the sixth straight reading. It has been bouncing between 7.0 and 7.5 for about 3 months. In the market, March, April, and May each showed positive returns, while June is +1% with one day to go. So March 9 still represents a possible end of the 16-month bear market that began in October 2007. The S&P 500 index has stayed above its March 9 close for 16 consecutive weeks.

2. Market Performance Since Last Outlook

New Outlook (6/29/09): 7.5 (POSITIVE)
Last Outlook (6/17/09): 7.0 (POSITIVE)

S&P 500 last time (6/17/09): 911
S&P 500 now: 927 Change: +2%

S&P 500 at beginning of 2009: 903
S&P 500 now: 927 Change YTD: +3%

S&P 500 at close 3/9/09: 677
S&P 500 now: 927 Change since 3/9/09: +37%

3. Indicators in Detail

· Conference Board Index of Leading Economic Indicators: No new report since last time. The indicator stays neutral. +5

· Fed Funds Rate: No change. The Fed Funds rate remains < 0.5%. Ten cuts (with no increases) since 8/07 brought the rate to near zero, plus many Federal programs are injecting money into the economy. +10

· S&P 500 Market Valuation: According to Morningstar, the S&P 500’s P/E remained about the same at 14.9 (it was 14.8 last time). At a value below 17.4, this indicator remains positive. +10

· Morningstar’s Market Valuation Graph is 0.92, unchanged from last time. It remains in neutral territory. (Historical data: All-time low = 0.55 on 11/20/08. Value at end of dot-com bear market = 0.78 in 10/02, which kicked off a 5-year bull market. Most recent low of 0.62 coincides with market’s March 9 low.) Neutral. +5

· S&P 500 Short Term Technical Trend: The S&P 500’s rally, which began on March 10, slowed in June (up 1%). The index fell below its 20-day simple moving average (SMA) for a few days, but since has risen slightly back above it. So the readings are lined up: index > 20-day SMA > 50-day SMA. Thus this indicator rises back to positive. +10

· S&P 500 Medium Term Technical Trend: The 50-day SMA has crossed through the 200-day SMA (a “golden cross”). Everything lines up: index > 50-day SMA > 200-day SMA, with the result that this indicator rises to positive for the first time in a long time. +10

· DJIA Short Term Technical Trend: The Dow also fell below its 20-day SMA, but unlike the S&P 500, it has not yet returned above it. The lineup: 20-day SMA > index > 50-day SMA. That makes this chart ambiguous and neutral. +5

· DJIA Medium Term Technical Trend: Unchanged since last time: Index > 200-day SMA > 50-day SMA. Ambiguous and neutral. +5

· NASDAQ Short Term Technical Trend: The index, 20-day, and 50-day SMAs line up in that order. Positive. +10

· NASDAQ Medium Term Technical Trend: The 50-day SMA had its “golden cross” through the 200-day SMA a couple of weeks ago. Index > 50-day SMA > 200-day SMA. Positive. +10

TOTAL POINTS: 75 NEW READING: 75/10 = 7.5 = POSITIVE

Learn more about the philosophy behind the Timing Outlook and how it is calculated. Click here.