(Once again Citizen King eschews the spin... this time providing some colour as to why stocks traded somewhat well yesterday. - AM)
The King Report
Februrary 3, 2009
A better-than-expected ISM kept stocks from tanking on Monday. The S&P 500 Index was trading near its highly significant support of 804 during European trading.
The ISM does not adjust its sample for firms that go bust. So a flurry of bankruptcies artificially boosts ISM because the busted firms’ negative data and conditions cannot be represented in the survey. Also, the ISM records neutral readings as a half positive. The ISM web site: The diffusion index includes the percent of positive responses plus one-half of those responding the same (considered positive). http://www.ism.ws/ISMReport/MfgROB.cfm
And finally, ISM is seasonally adjusted – using Commerce Dept seasonally adjustments! All seasonal adjustment factors are supplied by the U.S. Department of Commerce and are subject annually to relatively minor changes when conditions warrant them. [Ya conditions warrant them now?]