Financial Professionals


November 1st Global Data


As the calendar flips into November, multiple global economic data reports have been released. In the wake of these better-than-expected reports, my overall expectation for the S&P 500® Index (SPX) has not changed. The SPX remains in the midst of a modest “election correction.” However, today’s excellent data should be viewed as a necessary first step to restarting 2012’s prevailing bullish trend.
I categorize the correction as a pause, as the current evidence does not suggest anything more concerning than a shallow decline. My expectation is that the pause will refresh; the unknown is how quickly. The morning of November 7 may contribute significantly to how quickly the pause refreshes, not based on the winner of the election, but rather based on the margin of victory.
Investors should also pay heed to the technical formation for the SPX, which continues to trade in pristine fashion. During the current correction, the SPX has held support at both the 100-day moving average 1398.73 and 200-day moving average 1378.38 (Figure 1.1).
China PMI
• October China PMI reported at 50.2, the first plus-50 reading since July’s 50.1
• New Orders reported at 50.4, the highest reading since April’s 54.5
• New Export Orders rose to 49.3 from 48.8 last month
• Output rose to 52.1, the highest reading since May’s 52.9
U.S. ISM Manufacturing
• October ISM Manufacturing rose to 51.7, above the forecast for 51
• The 51.7 reading is the highest since May’s 53.5
• New Orders rose to 54.2 from 52.3 last month, the highest reading since May’s 60.1
• Inventories fell to 50.0 from 50.5 last month
• The all-important New Orders-to-Inventories ratio improves once again to +4.2, reversing the negativity surrounding August’s -5.9 
Figure 1.1  S&P 500 (SPX) Year to Date

Source: Bloomberg

Past performance is not a guarantee of future results.

Virtus Investment Partners provides this communication as a matter of general information. The opinions stated herein are those of the author and not necessarily the opinions of Virtus, its affiliates or its subadvisers. Portfolio managers at Virtus make investment decisions in accordance with specific client guidelines and restrictions. As a result, client accounts may differ in strategy and composition from the information presented herein. Any facts and statistics quoted are from sources believed to be reliable, but they may be incomplete or condensed and we do not guarantee their accuracy. This communication is not an offer or solicitation to purchase or sell any security, and it is not a research report. Individuals should consult with a qualified financial professional before making any investment decisions.