After the busy week last week, this coming week has just a few economic reports due out. Housing will be the focus on Wednesday as August Housing Starts and Existing Home Sales will be released. Both reports are expected to show some modest increases from July’s data. Initial Jobless Claims will be out Thursday morning. Consensus is for 373,000 new claims, down from last week’s 382,000 increase. The number remains too high and was likely one of the reasons that the Fed pushed for QE3. The employment situation remains a real concern.
The Dorsey Wright & Associates analysis of the markets indicate that US stocks and Bonds are the two favored major asset categories followed by Foreign Currencies, International stocks, and Commodities. Middle capitalization stocks are favored, as is growth over value, and equal-weighted indexes over capitalization weighted indexes. Equal-weighted indexes are those where each stock in the index is weighted the same, while in capitalization-weighted indexes the larger stocks have the largest weighting consistent with their size relative to the other stocks. The relative strength sector weightings favor Consumer Discretionary, Real Estate, Information Technology, and Health Care. US Treasuries and International Bonds are favored in the Bond category, while US and Developed Markets are favored within the International stock category.
On a personal note, I will be taking next week off and not writing an update. My daughter, LeeAnn, is getting married in Richmond on September 22nd and I will have the honor of walking her down the aisle. I want to wish LeeAnn and her future husband, John Martin, great happiness and success.