Chris Puplava: Signs of a market bottom have been building over the last week with today serving as no exception. Today, we received the Markit Economics flash composite purchasing managers’ index for May, which hit a 4-year high of 58.6, up from 55.6 in April and up from last May’s 54.5 reading.
The 58.6 reading marked the seventh consecutive month of expansion (readings north of 50) and saw the new orders index rise to the highest reading since February 2011.
The Markit Composite PMI release for May builds on a string of positive economic surprises which has helped push the Citigroup Economic Surprise Index into positive territory for the first time since February after bottoming in early April.
The economic momentum is beginning to spill over into market momentum as both the beaten up NASDAQ and Russell 2000 indexes regain their footing. For signs of an intermediate-term bottom I look for the percent of members within an index with a MACD baseline north of zero to reach 30% or less (middle panel below).