Our Indicators Turn Bullish
This week our major market indicators crossed over into bullish territory. Any score at 60 or above under our methodology qualifies as bullish, and this week hit 60.50. The one major change since last week was in the improved score of the market value of equities vs. the replacement cost of the associated assets. This result was just under 1.0, at a 0.9964 ratio. We compare the market value of equities, ex. Financials, to the net worth of non-farm, non-financial corporate businesses. This is our modified calculation of Tobin’s Q ratio. At under one-times, we score this as bullish, and that tipped the scales for the entire MMI scoring into the bullish camp. Essentially all other indicators were unchanged from the prior week. Thus, we are constructively bullish on domestic U.S. equities at this time. We recognize this opinion runs counter to the din of voices in the market place warning that the sky is falling, yet our data is giving us a bullish indication. Once again, we reiterate our rationale for what we are doing here: we do not hang our hat on one data point as a tell-all, but rather evaluate many factors across the market spectrum to arrive at a weighted score.