The Leading Indicator Nobody Cares About

I bet you don't spend much time thinking about the Baltic Dry Index... After all, as its name suggests, the index measures the shipping costs for dry goods. [Chaikin PowerFeed]( The Leading Indicator Nobody Cares About By Pete Carmasino | chief market strategist | Chaikin Analytics I bet you don't spend much time thinking about the Baltic Dry Index... After all, as its name suggests, the index measures the shipping costs for dry goods. Dry goods are raw materials that trade in bulk. They include things like iron ore, fertilizer, coal, cement, and grains. Altogether, they're lumped into the "commodities" category. Most days, folks just don't care about the costs to ship these commodities around the world. But when we're in a recessionary environment like today... this information is critical. Ordering these materials is part of the initial stages of global commodity trading. So when the index is elevated, it's inflationary. On the flip side, lower levels can mean lower inflation. And put simply, freight-shipping costs are crashing right now... This plunge tells us that demand is falling. In other words, people are buying less. And in turn, companies are buying less. With that in mind, you might interpret crashing shipping costs as a good thing. It could signal that we've passed "peak inflation." And while that might be true, there's a downside... In short, the sharp move down is now signaling an earnings recession. This story has played out before. And it has big consequences for the stock market... Recommended Links: [How to Instantly Collect Thousands EVERY Month... No Matter What Happens in the Market]( For the last 12 years, this 94% accurate, "stock-free strategy" has given readers the chance to see instant upfront cash payouts like $880, $1,300, and $1,370 in a single month .. but right NOW could be the best moment ever to start using it in your portfolio. [Dr. David Eifrig shares his analysis right here](. 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Then, starting in May 2008, the destruction was much worse. The Baltic Dry Index dropped from a peak of around 11,800 all the way down to 700 – a 94% decline in seven months. Through the second half of 2008 and into 2009, the S&P 500 sold off significantly. It fell more than 50% from about 1,430 in May 2008 down to its bottom at 676 in March 2009. Recently, the same type of drop in shipping costs started unfolding... The downturn in the Baltic Dry Index began at the end of May. The index peaked at roughly 3,375. And it's around 1,175 today – a 65% decline in three-plus months. Take a look.. [Chaikin PowerFeed] That's a huge drop. And based on history, it tells us that the S&P 500 could fall further in the weeks and months ahead. It's the leading indicator nobody cares about. But it gives us a "heads up" at how current orders impact the S&P 500. In fact, this shift is already showing up in the earnings reports... According to a FactSet research report last week, the decline in the earnings estimates in the first two months of the third quarter was significant. It eclipsed the five-, 10-, 15-, and 20-year averages. And it gets worse... Companies are also decreasing their estimates for the fourth quarter. FactSet's data showed that the average decrease was 3.5% over the same reporting period. As investors, it's essential to keep our eyes on less-followed indicators – like the Baltic Dry Index. Sometimes, we just need to remember to get back to the basics... Fewer orders mean lower shipping costs. And in turn, that means lower earnings. Even if it's something as boring as dry goods... it's the reality of the market we face today. Good investing, Pete Carmasino Market View Major Indexes and Notable Sectors # Hld: Bullish Neutral Bearish Dow 30 +0.60% 0 24 6 S&P 500 +0.66% 99 285 113 Nasdaq +0.52% 18 57 25 Small Caps +0.83% 353 1038 458 Bonds -1.03% Financial +1.76% 12 35 19 — According to the Chaikin Power Bar, Small Cap stocks and Large Cap stocks are somewhat Bearish. Major indexes are mixed. * * * * Top Movers Gainers [rating] REGN +18.85% [rating] FCX +7.89% [rating] IVZ +4.77% [rating] ON +4.74% [rating] MRNA +4.73% Losers [rating] MKC -6.71% [rating] KHC -3.38% [rating] CPB -2.98% [rating] KR -2.93% [rating] O -2.80% * * * * Earnings Report Reporting Today Rating Before Open After Close KR No earnings reporting today. Earnings Surprises [rating] ZS Zscaler, Inc. Q4 $0.17 Beat by $0.06 [rating] EGAN eGain Corporation Q4 $0.07 Beat by $0.08 [rating] RH RH Q2 $7.97 Beat by $1.27 * * * * Sector Tracker Sector movement over the last 5 days Materials +3.35% Discretionary +2.86% Financial +2.71% Utilities +2.20% Health Care +2.01% Real Estate +1.50% Industrials +1.09% Energy +0.11% Information Technology -0.04% Staples -0.35% Communication -1.40% * * * * Industry Focus Semiconductor Services 1 25 12 Over the past 6 months, the Semiconductor subsector (XSD) has underperformed the S&P 500 by -4.73%. Its Power Bar ratio, which measures future potential, is Very Weak, with more Bearish than Bullish stocks. It is currently ranked #20 of 21 subsectors and has moved down 2 slots over the past week. Indicative Stocks [rating] AMBA Ambarella, Inc. [rating] MRVL Marvell Technology, [rating] NXPI NXP Semiconductors N * * * * You have received this e-mail as part of your subscription to PowerFeed. 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