So How Did 'Ya Like That ISM Number?

A better question is, “do you believe it”?

Manufacturing continued to grow in August as the PMI registered 56.3 percent, an increase of 0.8 percentage point when compared to July’s reading of 55.5 percent. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

Expansion (and improvement in expansion) was shown in orders, production, employment and inventories, plus prices spiked.  Backlogs decreased.  Imports were up sharply.

Why would one question this?

Mostly because the regional Fed indices have shown no such thing – to the contrary, they have been showing marked slowdowns and in some cases actual negative prints.

So how do we get this sort of ISM number?  More to the point, are the regional Fed surveys wrong?

I kinda doubt the latter.

Who knows where this came from.  What’s not in dispute, however, is what it did with the market:

If I’m supposed to be impressed by this, I’m not.  Most-specifically because the volume, post-ramp, was entirely uninspiring, and so was the lack of follow-through.  Never mind that your real opportunity to get long, if you intended to, was at 3:00 AM – by the time the spike happened on the ISM release it was too late.

Finally, we’re now up near that neckline again from the pattern that had completed – a rather common event, and one that frequently shakes people out – at which point the market collapses.

I get more impressed if we break over 1098.  For the time being the best thing to do is to sit – and remember the longer-term view, which is found right here:

The week is young, but the 13/34 Weekly EMA is negative – and if you recall, the last time we took a trip up and everyone was urging you to buy, well, there was a little three-week trip toward the southside that rapidly ensued, and of course the “boys” primary job is to get you to commit forced errors – that is, they want to ply you with the siren song of “missed profits” (or worse, “you’re gonna get forced out“)

Indeed, that sort of snarky garbage was the order of the day, even though the net profits, in terms of S&P points after the ISM report (that is, once you had the time to react) was a grand total of four - count ‘em – four S&P points (out of 30.)  My Twitter box was filled with it, and if you’re “patronizing” places on the ‘Net that cater to (and do not throw off) the jackals that run this sort of garbage, you’re asking to have emotion overrule common sense – with disastrous results.

Oh yeah, up volume was 22 times down, and the TRIN was 0.26 at the bell.  Closing TICK?  1266 and the high of the day - way into panic/exhaustion territory.

Patience grasshopper…. we have five Hindenburg Observations in the current cluster on the board.  I am reminded of the same sort of “good news” panic-buying that took place a couple of years ago when Fannie and Freddie were “saved”… and I’m sure you can remember what came next.

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