Squawk Morning Briefing: Leading Indicators

Keep in mind that the stock market is a leading indicator of economic activity and not the other way around as many investors presume. Economists have known this for some time and prices of the S&P 500 are included in the official leading economic indicators statistic. Therefore, we would expect to see declines in the market before any significant weakening in the economy. Nevertheless, there are some signs of possible weakness on the horizon. Among them is a change in recommendations from Goldman Sachs, which has now removed its overweight on commodities based on weakening economic environment.

Those who prefer to think independently are unlikely to be swayed by our discussion so far. For one thing, we’ve appealed to both economists and Goldman Sachs as authorities. We, too, see the environment as ripe for a turn down in U. S. equities. However, we continue to need to temper our outlook for that possibility with the need to observe an actual impulsive decline below important support. Today’s videos update possible scenarios for how such a decline might come about.

We want to stress that this is in order to be prepared in case we see the declines materialize in that fashion, not a prediction that they will unfold exactly as described. If they do, then it is a gift. If not, we continue to wait for clear signals.

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The Elliott Squawk Newsletter

Elliott Squawk delivers thorough market preparation every morning in time to take action during the trading day. By combining up-to-the-minute futures activity with traditional end-of-day analysis from cash indices, you receive analysis based on the latest conditions as the trading day sets to open. Each issue of Elliott Squawk goes beyond traditional Elliott Wave analysis because we recognize that trading Elliott Waves is much more than just looking at the most likely current count. Squawk will prepare traders to assess the market action as it unfolds by answering questions that any Elliott Wave trader should consider:

• What price levels and wave motions would confirm an expected move?
• What price levels would make an alternate scenario more likely?
• What technical indicators should be watched throughout the day to interpret wave action?
• What intermarket movements merit special attention to understand likely price trends?

Markets Covered:

Each day Elliott Squawk will update the outlook for the following markets:

• The Dow Jones Industrial Average
• YM e-Mini Dow Futures
• The S&P 500
• The EUR/USD cross
• The U.S. Dollar Index
• U.S. Treasury bond futures

From time-to-time when circumstances warrant, Squawk will present analyses of other markets that help interpret wave action in a covered market. For example:

• If S&P 500 and Dow counts are ambiguous and NASDAQ behavior helps identify the likely next move then NASDAQ analysis will be presented.
• If the EUR/USD count is ambiguous and the USD/CHF cross helps us to understand what might happen then we’ll present the intermarket analysis the Squawk subscribers.

At the end of the day Squawk subscribers will receive a brief market recap that summarizes how the day’s events compared with expectations and what issues are likely to be analyzed in the following morning’s Elliot Squawk.

About the Analysts

Kevin McEwen and David Starr are best known to First Wave chat room participants as Kevy99 and Managematics and by their reputation for their Elliott Wave counts that have predicted market turning points. Kevin has been counting Elliott Waves for 28 years, successfully forecasting market moves in virtually every financial environment. David brings together talents in financial market analysis and software development to his wave counting. He has authored many of the studies used by First Wave Traders as well as a number of proprietary studies to aid in counting waves.

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