Stock Market Recovery Is A Dead Cat Bounce

New York (Feb 16)  A few months have passed since the stock market correction in December 2018. Today, the markets have recovered, and it seems nobody is worried anymore (see S&P chart below from Yahoo Finance). However, the numbers are not looking good, so caution is advised if you decide to jump into the stock market. 

First of all, the leading economic indicator has hit a new low for the year (See FRED chart below). We haven't seen such a bad number since 2010. So I expect that the coincident "soft" indicator will follow soon. Let's go over the deteriorating "hard" indicator numbers.

The latest GDP numbers were abysmal. The Atlanta Fed slashed its GDP forecasts for Q4 in half to 1.5%. So we are really approaching a recessionary period here.

Inflation-adjusted retail sales are now negative year over year (see FRED chart below). Retailers like J.C. Penney (NYSE:JCP), Macy's (NYSE:M) and Nordstrom (NYSE:JWN) have been underperforming.

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