Thoughts

1 am: High yield spreads continue to narrow. A medium-long term bullish sign for the stock market.

High yield spreads have refused to trend upwards.

This is a medium-long term bullish sign for the stock market and suggests that the stock market will continue to trend higher in the medium-long term. Bond market participants are smarter than stock market participants, which is why the bond market is a leading indicator for the stock market. Historically, high yield spreads widen (trends higher) before a bull market tops.

1 am: Low levels of growth in margin debt suggests that the bull market still has room to run.

Margin debt continues to rise with the U.S. stock market.

However, the year-over-year % change in margin debt is more important. The % change tends to spike towards the end of an equities bull market. Without a spike, the current bull market will most likely continue.

1 am: New Home Sales fell a little but are still trending higher. A medium-long term bullish factor for the stock market.

New Home Sales’ latest reading went down from 638k to 627k. But more importantly, New Home Sales are still trending higher. This is a medium-long term bullish sign for the stock market.

*New Home Sales tend to fall for 1-2 years BEFORE the equities bull market ends. We are watching out for signs of sustained deterioration in New Home Sales. There have been none so far.