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Crash or Correction? See What Key US Economic Data Are Indicating!
Shane My
Publish date: Tue, 14 Oct 2014, 04:51 PM
Shane My
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Like many of us, we seek for financial security and ultimately financial freedom. This blog is intended to act as a journal of investment as I journey towards that dream. At the same time, I hope that the articles written here would also benefit many others who share the same vision as me.
For the past 5 days (8th Oct 2014 - 13th Oct 2014), the Dow Jones Index have shed 429.34 points (-2.52%). There's raising concern that there will be further correction of the Index as investors continue to let go of their stock holdings.
Is this the time for us the local Malaysian Investors to exit our holdings as well? Or perhaps this is a correction that creates opportunities for us to buy stocks or unit trust at low prices?
 |
| Dow Jones Crashing or Correcting? |
Technical analysis aside, let us take a look at the current US Economic Data to see if we are infact facing crash or a correction?
Economic Data:
1) US Purchasing Managers Index
- Benchmark : Value above 50.00 indicate positive manufacturing growth
- US PMI data as of 30 Sept 2014 : 56.60
- US PMI data as of 31 July 2013 : 55.40 (previous review)
- Additional Information : The PMI data for 30th of September 2014 increased by 1.20 (+2.17%) in comparison to PMI data of 55.40 recorded on 31st of July 2013
- Current Outlook : POSITIVE
What is PMI? Click HERE to find out.
2) US Unemployment Rate
- Benchmark :
- Highest Unemployment Rate Recorded over 10 years : 10% in Oct 2009
- Lowest Unemployment Rate Recorded over 10 years : 4.4% in May 2007
- 2008 Global Financial Crisis was forewarned when Unemployment Rate spiked from 5.0% in April 2008 to 5.4% in May 2008
- Unemployment Rate for Sept 2014 : 5.9%
- Unemployment Rate for July 2013 : 7.4% (previous review)
- Additional Information : Currently the Unemployment rate is still at reducing trend. Investors to be wary when the Unemployment Rate touches the 5.0% and below range. Also to watch out for sudden increase of unemployment rate when the figures are at 5.0% and below.
- Current Outlook : POSITIVE
- Benchmark :
- Positive Yield Curve indicate economic recovery
- Flat Yield Curve indicate slow economic growth
- Negative Yield Curve indicate impending economic recession
- US Treasuries Yield Curve as of 10th Oct 2014 : Positive Yield Curve with Low Interest Rate
- US Treasuries Yield Curve as of 31st July 2013 : Positive Yield Curve with Low Interest Rate (previous review)
- Current Outlook : POSITIVE
More about Yield Curve? Click HERE.
SUMMARY
All three (3) main economic data from the United States are indicating a positive outlook at the present moment. However, investors should watch closely the unemployment data as it is close to approaching the critical value of 5%.
In my honest opinion, the Dow Jones is currently undergoing a correction and not a crash. Economic data are indicating that the fundamentals of growth in the US are still strong.
Disclaimer : I must stress that what I;ve to posted above are purely economic data. It is not a recommendation to buy or sell. The choice is ultimately yours to decide.
P.s : If you are looking for a passive long term investment via online, feel free to contact me at shanesee03@gmail.com
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Discussions
2 people like this. Showing 40 of 40 comments
Yess..... If I have huge capital I will buy a lot in this correction. But I'm just starting pity.
2014-10-14 17:50
The politicians may have different agenda behind in manipulating the market. It's possible they would let the market collapse through increasing interest rate in year 2015. Being a Hero by introducing huge QE4 to bring back the bull and prepare for the presidential election in year 2016.
2014-10-14 19:11
You have totally missed the point!!!
It is not bad data which are causing the drops in the US markets now, instead it is the good data that are the problem as they will prompt the FED to increase the interest rates sooner rather then later.
The end of QE and this interest thingy is the bad that is causing the markets to drop.
Don't you know it is the FED which is propping up the markets all this while??!!
2014-10-14 19:22
a clash in the middle of recovery?? i hope klci will drop back to 1500,but not my undervalue stocks.
2014-10-14 19:33
it is a question of when not if...
anyway, point is, it is not the economy/the good data which are calling the shot at the moment as far as the markets are concerned
2014-10-14 19:35
I fully concur with the article. US is doing well. China is a bit slow, but mot crashing. So why is the selling down ? Looked to me more like correction rather than bear market
2014-10-14 19:36
Its a bear mkt if u look at dj small cap. Most of them melt ady.
Same here. The question now is whether your stocks can go against the bear.
2014-10-14 19:40
its crash mkt if u look at dj. its matter of time all will lose 50% of their investment. he question now is whether you go insane or not.
2014-10-14 19:44
I want to see how long can our top 10 blue chips stand after announcing lackluster quarterly results. Wakaka
2014-10-14 19:44
All europe major indices has entered bear zone this week. 3% away for dj n snp. Nasdaq officially bear tonite if dont go up.
nikkei entering bear.
Oil price bear. To sum up. Its a big bear mkt with intermittent rebound.
2014-10-14 19:45
copycat.boring...zzzzzzzzz
Posted by optimusx8888 > Oct 14, 2014 07:45 PM | Report Abuse
All europe major indices has entered bear zone this week. 3% away for dj n snp. Nasdaq officially bear tonite if dont go up.
nikkei entering bear.
Oil price bear. To sum up. Its a big bear mkt with intermittent rebound
2014-10-14 19:48
Now have u make up your mind? Job offer. Usd 5k a month. No need do anything. Just wear clown uniform let us laugh.
2014-10-14 19:53
laugh me die. talk kok but no money.
Posted by optimusx8888 > Oct 14, 2014 07:53 PM | Report Abuse
Now have u make up your mind? Job offer. Usd 5k a month. No need do anything. Just wear clown uniform let us laugh
2014-10-14 19:57
To crash it needs a black swan though there are plenty flying around none has landed, so it looks like a correction, a strong one may be.
2014-10-14 22:47
the explanation of today's plunge -
http://www.marketwatch.com/story/heres-whats-driving-the-market-meltdown-2014-10-15?mod=MW_default_latest_news
2014-10-16 05:26
No time to run when the black swan popped up suddenly. Be ready to hunt black swan after it has landed on earth. Kikiki
2014-10-16 13:53
starts with corrections... everyday until all cant tahan.. then ops, its really a crash :(
2014-10-16 14:53
People don't have any hope of data turning from negative to positive anymore. This is the problem of positive data. People are expecting the economy data goes reverse trend soon. wakaka
2014-10-16 16:06
It may stage a technical rebound and Mr. Market likes to trap those fellows play bottom fishing. kikiki
2014-10-16 16:33
i think this week got few counters showing good support already/bottom. but need to last at least 1 week to confirm.. some still lau sai... like you said.. looks for bottom but being play out
2014-10-16 16:36
whats the big crush about. i dint see any significant event happening and every1 start to panic olready. besides really really funny haha domino effect
2014-10-16 16:37
PBB may land a bomb in finance sector if it announce a lackluster quarterly results next week.
2014-10-16 16:44
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hopefully you are right!!! too much pessimism in the market at the moment!!!!
2014-10-14 17:24