ISM PMIISM PMI for contrasting with BTC price. We develop this comparison to have a prediction on btc price.
USBCOI trade ideas
ISM Manufacturing & ISM Services PMI Combined show trigger levelISM Manufacturing and ISM Services PMI Combined 🪢
This week the ISM PMI's were released as follows:
🚨ISM Manufacturing PMI = 47.2 (contractionary)
✅ISM Services PMI = 51.5 (expansionary)
With both metrics offering mixed signals, I decided to make a chart that combines the ISM Manufacturing and ISM Services PMI into one dataset on the chart.
Interestingly it provided a clean chart with many patterns to observe, and useful forward looking trigger levels to keep an eye on. Don't forget you can update on this chart data anytime on my TradingView page with one click.
At present you can see that the data is compressed into a something resembling a "Darvas Box". I understand this not price but data, however this economic data is clearly in a compressed channel and appears uncertain in terms of a definitive direction. It has also never been in a pattern like this for this long in the past, which could mean a break out up or down is closer than it is further away.
Prior patterns have demonstrated that break throughs of both diagonal and horizontal support lines has resulted in significant downward movements. This is evident on the chart and this is something we can watch out for should we break below the box.
Consistent with past recession's the Combined PMI dropped below the 50 level (🔴red circles) way back in Dec 2022. Since then we have oscillated around the 50 level in the compressed box in indecisive fashion.
Never has the data behaved specifically this way in the past, specifically for this long. There are no other compressed boxes of data lasting this long. At some stage the ISM Data will push the its way out of this box I have drawn and it could be a good indicator to observe for early signals of the direction of the economy in the U.S. as a whole (both services and manufacturing combined)
As always, this chart in on my TradingView page, and you can click on it at any stage to get an updated reading on the chart so you can quickly get a visual update on the direction of the U.S. Economy via combined ISM PMI's.
Enjoy
PUKA
ISM Manufacturing PMI is below recession range of under 50The ISM Manufacturing PMI is below recession range of under 50, pointing to a contraction in the US manufacturing sector.
Market is not yet as healthy as the equity market would elude to.
Something to keep an eye on to check in on the health of the US economy
ISM Indices vs. GDP YoY% - Leading Economic IndicatorsBoth ISM Manufacturing Index and Non-Manufacturing Index vs. GDP YoY% for the US economy.
ISM Manufacturing: Yellow
ISM Non-Manufacturing: Blue
GDP YoY%: Green/Red
ISM Manufacturing currently signaling contraction with a level below 50 and the momentum seems lower.
Non-Manufacturing Index is likely to follow the same path although currently signaling growth, but less than before.
GDP YoY% could potentially experience a slow-down within the next 6 Months to a Year.
The FED has being somewhat more Dovish on the latest speech, as they're seeing a negative outcome in keeping Interest Rates higher for much longer.
recovery of the manufacturing cycleAfter more than a year of manufacturing PMI stay below 50, meaning the manufacture activity is below average, recently (start Oct 2023) the manufacturing PMI seems recovering in US, UK, France, Italy, Greece. and if manufacturing is getting better, oil demand should be elevated and so the oil price.
Macro Monday 13~Purchase Managers IndexMacro Monday 13
ISM Purchasing Managers Index
The ISM Purchasers Managers Index (PMI) measures month over month change in economic activity within the manufacturing sector.
The PMI is a survey-based indicator that is compiled and released each month by the Institute for Supply Management (ISM). The survey is sent to senior executives at more than 400 companies in 19 primary industries, which are weighted by their contribution to U.S. Gross Domestic Product (GDP).
A PMI above 50 represents an expansion in manufacturing when compared with the previous month. A PMI reading under 50 represents a contraction while a reading at 50 indicates no change. The further away from 50, the greater the level of change.
According to Investopedia "ISM data is considered to be a leading indicator of economic trends. Not only does the ISM Manufacturing Index report information on the prior two months, it outlines long-term trends that have been building over time based on prevailing economic conditions".
The ISM reports are released on the first business day of each month for the month that has previously closed. Thus, they are some of the earliest indicators of current economic activity that investors and business leaders get regularly. Something to look out for next Monday 2nd October 2023.
The PMI focuses mainly on the five major survey areas;
1. Employment (20%)
2. New orders (30%) Covered in Macro Monday 6
3. Production/Output (25%)
4. Inventory levels (10%)
5. Supplier deliveries (15%)
We covered the ISM New Orders Index in Macro Monday 6 as it is the largest component of the Purchaser Managers Index making up 30% of the overall index. I will leave a link to the chart.
The Chart
The chart outlines the last 12 recessions (shaded red zones) with the PMI readings over the same period. As we are already aware above 50 on the PMI reading is expansionary and below 50 is contractionary (red thick line).
Three Main Findings
1. In 11 out of 12 recessions a PMI reading at or below 42 was established. This means if the PMI falls to 42 there is a 92% probability of a recession. At present we have not reached that level, we are currently at 47.6.
2. The PMI has bottomed 10 out of 12 times in Quarter 1 (between Jan – March) with the remaining two bottoms happening in Quarter 2 (both in May). This means that 83% of the time the PMI cycle appears to bottom in Quarter 1 with the most bottoms in January (6) with Feb(2) and May(2) in close second place.
- It’s worth noting that the bottom of the PMI cycle
may not be the bottom of a stock market cycle. If
we are forward looking then a rising PMI is positive
for the economy and markets but ideally a move
above 50 is the true signal of economic expansion
from a manufacturing standpoint.
3. The average PMI bottom to bottom cycle timeframe over the past 6 cycles is 58 months with the shortest being 37 months and the longest being 86 months. We are currently at month 38 and the average month of 58 is Jan 2025 with the max of 86 months being May 2027.
- How interesting is it that both these potential PMI
bottom dates line up with our two most frequent
PMI bottom months indicated in point 2 (January
and May).
- Interestingly according to U.S. government
research, since WWII the business cycle in America
takes, on average, around 5.5 years which closely
aligns with our 58 month (or roughly 5 year)
indication for the PMI chart. The business cycle
incorporates an aggregate of economic data such
as the ISM data, GDP and income/employment
metrics. We might cover the business cycle in more
detail on a future Macro Monday.
The ISM New Orders Index (30% of the PMI)
Similar to the ISM New Orders Index Chart (covered in Macro Monday 6) which makes up 30% of the PMI, we have not reached below the 42 level on this chart either which has provided a 100% confirmation of recession when we have had a definitive move below the 42 level historically.
For ISM New Orders if we stay below a sub 50 level on the ISM New Orders Chart for greater than 7 months it has resulted in a recession every time except for 1966 and 1995 (8 out of 10 times). We are currently 14 months below the 50 level which is unprecedented, with the new orders index nudging a little lower on the August reading from 47.3 down to 46.8.
ISM Data Release 2nd October 2023
When we receive our next ISM Data release next Monday 2nd October 2023 we can refer back to the PMI chart and the New Orders Index Chart and see how things have progressed and if we have reached and critical levels.
These charts and the others I have completed on Macro Mondays are all designed so that you can revisit them at any point and press play on TradingView and see if we are breaking new into higher or lower risk territory.
I hope they all help towards your investing and trading decisions.
Have a great Monday guys, Lets get after it!
PUKA
PMI the last drop into march 2024The chart posted is the PMI and the green up arrows are when the PMI turned up . What also happened was the stock market began rather strong up moves at or within 60 days of the Up turn. The pmi is telling me we have been in a RECESSION and the treasury to mask the recession as been funding the Quarterly with T Bill .I look for the drop in the markets rather soon . And I also look to Yellen to do this with the fed at the same time dropping rates 25 basis by late march of may cycle . This is only being done to make sure they try everything they can do to stop yes I will say it TRUMP. 2025 the beginning of the phase seen 1937 to 1942 I am basis is the chart patterns and data from 1902 and money velocity data since 1913
Ominous Signals Possible Slowdown In EconomyThere are several economic indicators showing ominous signals that the economy may be slowing down specifically in the manufacturing sector and here is why.
The ISM Manufacturing PMI has been contracting in recent months signaling there is a slowdown in manufacturing which can have several consequences including slower economic growth, job losses and a decrease in consumer spending if workers are laid off due to lower disposable income. The slowdown in manufacturing is further validated by the build up in U.S Crude oil inventories and falling durable goods orders. What this means is the demand for oil is going down and factories and manufacturing plants are actively reducing their use of crude oil which is a much needed commodity to conduct manufacturing. Durable goods are goods that have a life span of 3 years or more which could include new business equipment or new machinery. This has been declining in recent months signaling that investment in new equipment has been contracting which could be a sign that businesses are growing more pessimistic about the future and may want to allocate their money to other areas or just save more money in case of further manufacturing slowdown.
Last but certainty not least consumer sentiment has been trending down signaling that despite the historically low unemployment something is driving consumers to remain pessimistic and this could be for a variety of different and complex reasons including the effects of inflation possibly even this slow down in manufacturing or the fact that personal savings are very low and many people feel they are working so hard for so little.
Anyways with all being said these are defiently things to keep a watch on I would continue to monitor the ISM Manufacturing PMI, U.S Crude Oil Inventories, Durable Goods Orders and Consumer Sentiment.
Some additional indicators to watch could be
- Unemployment rate / If this starts to rise this can be a very bad sign that the weakness could spread.
- Strength Of Consumer Spending / If this starts to weaken it could signal that consumers are beginning to grow more worried and may not want to spend as much due to the fear of losing their job which could have a huge host of issues.
- Interest Rates / If interest rates continue to rise this can further put pressure on the economy by increasing the interest people must pay on their debt which can put further strain on consumers pockets.
Overall there are signs that things may not be completely breaking due to the historically low unemployment rate and consumers continuously showing their resilience and continuing to spend despite all of the negative consumer sentiment. However if the slowdown spreads and manufacturing continues to prolong the slowdown it could be an ominous signal that the economy is slowing down which can lead to a recession.
Will Commodities and Crypto catch up to current PMI readings?
PMI readings (services and manufacturing are in an uptrend
Stocks and Gold are in line with current PMI readings (e.g. services PMI)
Commodities (WTI/Oil) and Crypto are lagging behind and may catch up to current PMI readings
YoY%-Changes of all assets are shown in the following chart:
Disclaimer: this is not investment advice. You are responsible for your own actions.
Market Cycle: BTC vs. ISM; (updated) BTC cycle low precedes the ISM cycle low by about 1 year, while the BTC and ISM cycle highs occur at roughly the same time within the market cycle. Presumably, the cycle highs are approximately coincident due to increased liquidity associated with QE?
ISM is moving higher after the dip in June 2023. If the dip in June 2023 turns out to be the low for the ISM this cycle, then the 12-15 month measurement from the BTC low in December 2022 won't be valid this time around. I hope this is the case! However, there could still be some room (time between now and the 12-15 month mark) for a rapid dip in ISM before a recovery and build-up towards ATH. Let's see how this develops...
This chart is a minor update of a previous version published on July 29, 2023:
Updates Made: Added 12-bar measurement and gray shaded rectangle beginning at the most recent BTC low in December 2022. Also added orange 15-bar measurement and orange vertical dashed line.
Market Cycle: BTC vs. ISMBTC cycle low precedes the ISM cycle low by about 1 year, while the BTC and ISM cycle highs occur at roughly the same within the market cycle. Presumably, the cycle highs are roughly coincident due to increased liquidity associated with QE?...
ISM SqueezeTechnical analysis of the Purchasing Managers Index (PMI) from Institute for Supply Management
ISM PMI Long Term Chart - 04/08/23The ISM currently stands at 46.3%, signaling a contraction.
Business activity is implying that rising interest rates and growing recession fears are starting to weigh on businesses. The reading pointed to a fifth straight month of contraction in factory activity, as companies continue to slow outputs to better match demand for the first half of 2023 and prepare for growth in the late summer/early fall period.
Frequentist's will tell you that the market tends to bottom six months after the ISM drops below 50.00.
In the chart, I've drawn a channel with fib standard deviations.
This will be a good one to save and track
