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The “Heat Map”

April 22, 2014 | Weekly Commentary

Most of the time the U.S. stock market looks to 3 factors (call them the “pillars” that support the stock market) to support its upward trend – let’s grade each of the pillars.

CONSUMER SPENDINGWe have upgraded this factor to B (above average) based upon the increase in retail sales as reported in recent economic reports.

THE FED AND ITS POLICIES:  We continue to grade this factor an A+ (extremely favorable) because the FED cannot do much more than it is doing to support the stock market and asset prices.

BUSINESS PROFITABILITY:  We rate this factor B- (slightly above average). U.S. corporations are in the midst of the first quarter’s earnings reporting season.  About 90 of the S&P 500 companies have reported their earnings.  66% have exceeded expectations but this is slightly below average.  We will continue to follow this closely.

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