11/18/2011
By Carlos Guillen, Research Analyst

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So far there continues to be a lot of uncertainty in the air; however, Friday's trading session was rather calm, after a roller coaster of a week. the Dow Jones Industrial Average finished slightly in green territory, up close to 0.25%. We believe next week should be another rough again as it will reveal the affects of the Spanish elections this weekend, the ongoing protests in Greece, and the Super Committee reduction plans--which more than likely will not be met.

Perhaps a bit encouraging, leading indicators have brought some hope back to the market, not a lot of hope, but we'll take all we can get. The Conference Board announced that its index of Leading Economic Indicators increased by 0.9% in the time frame between September and October, landing slightly above the Street's consensus estimate of 0.6% and continuing to move in the right direction. The increase represented the sixth consecutive month of improvements to the index.

Nine of the 10 components of the leading index contributed to the increase in October. These were led by a jump in building permits, the spread between short-term and long-term interest rates, a longer factory workweek, and a drop in claims for jobless benefits. The negative contributor was index of supplier deliveries (PMI).

The results were a clear positive; the leading indicator results were encouraging in that there were more positive components, the index continued to increase, and the increase in the index was better than expected. Most of all, the news was encouraging because it signaling that the economy will likely continue to expand through early next year. An improvement in household sentiment has already given the leading index a boost this month. The University of Michigan index of consumer expectations for six months from now climbed to 56.2 in November, a five-month high, from 51.8 in October. Nonetheless, the measure remains below the 80.5 average of the previous expansion that ended in December 2007.

Carlos Guillen
Wall Street Strategies