As I said in a previous post, I don't usually put much stock in the Leading Economic Indicators published by the Conference Board. But the pronounced rebound in this statistic, whose growth rate is shown in the above chart, is so strong that it is probably risky to ignore it. Mark Perry has some amplifying comments here. I note that the current rebound is the third-strongest on record.
It then occurred to me to put together this next chart, which shows the level of the LEI index on a semi-log scale. I note that the index was roughly flat throughout the 1965-82 period, when equities delivered negative real returns for 17 years. But today the index appears to still be following the significant uptrend which began in late 1982. I don't want to make a big deal of this, but I do think it's worth noting. I've seen a number of people attempting to make the case that the bear market which began in 2001 is going to be a replay of the 1965-82 bear market. While I still worry that inflation will be higher than the market expects in coming years, there is no sign yet that inflation will be anywhere near as bad in coming years as it was in the 1970s.
After hitting the canvas in a.m., the DJI rallied hard in afternoon, way back over 11,000.
ReplyDeleteI know this is just one day, and 11,000 is just a number.
Still, this was heartening. We are now getting rally days even when there is some bad or so-so news, and even if the a.m. looks ugly.
I wish I had the data but there is a VERY good equity manager based in Nashville, TN that had an indicator he called the 'smart money' indicator. PLEASE don't hold me to this but Benj tripped an old memory with his post - the indicator measured the first hour's trading VS the final hour's trading over many days and somehow quantified it. The theory was that early trading was emotional, and thus naive, while the late in the day trading was more sophisticated and thus 'smarter'. I never paid attention to it over any meaningful periods of time but the manager used it consistently as one of his many 'tells'. I have no idea what it is registering now but anecdotally it seems to me the markets have been fairly strong late in the day recently. Maybe Scott has heard of it and has some data on it. I don't.
ReplyDeleteI remain bullish in any event.
`I'm not aware of that indicator
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