Posts Tagged ‘leading indicator’

RADAR LOGIC: CA, A LEADING INDICATOR OF REAL ESTATE IS HEADED DOWN ALREADY

RADAR LOGIC: CA, A LEADING INDICATOR OF REAL ESTATE IS HEADED DOWN ALREADY

Courtesy of The Pragmatic Capitalist 

Excellent commentary here from Michael Feder, chief executive officer of Radar Logic Inc. Feder says some very negative trends in housing are developing – the most worrisome of which is the deterioration in CA prices, which, according to Feder, is a leading indicator for the rest of the country: 


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CHINA: THE LEADING INDICATOR OF LEADING INDICATORS

CHINA: THE LEADING INDICATOR OF LEADING INDICATORS

Shanghai Jade Buddha Temple November 2006 Photo: Roger Parker

Courtesy of The Pragmatic Capitalist 

We’ve often referred to China as a leading indicator of equities over the last few years.  Some sell side analysts have caught onto the trend as well (which likely means it will stop working now).  CitiGroup highlights China’s emergence as the “leading indicator of leading indicators” (via FT Alphaville):

“China is the biggest emerging market in the world, currently accounting for 18.6% of the MSCI GEMs index. We have noticed how, since the end of the last bull market in 2007, the Chinese market has often seemed to reach an inflexion point before other leading global market indices. As equity markets should act as a leading indicator of broader economic growth trends, it seems, therefore, that the Chinese equity market has recently become ‘the leading indicator of the leading indicators’. Given that the local Shanghai Composite index and MSCI China have both rebounded by 13-15% from their recent lows and our China strategist, Minggao Shen, has just turned more bullish on the market1, these events are a positive mix for global emerging markets as a whole. This is, therefore, a good time to consider the Chinese market’s role as a signaling mechanism for GEMs as a whole.”

china CHINA: THE LEADING INDICATOR OF LEADING INDICATORS


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Is the Stock Market a Leading Indicator?

Is the Stock Market a Leading Indicator?

Courtesy of Mish 

Inquiring minds are pondering the question "Is the Stock Market a Leading Indicator?"

Please consider the following two charts.

S&P Monthly Chart 1980-1992

$SPX

click on chart for sharper image

Vertical bars on the chart show when recessions began. There were three recession isn this period, starting January 1980, July 1981, and July 1990 according to NBER Business Cycle Expansion and Contraction Data. The NBER is the official determinant of recessions.

Looking at a chart of the S&P it is difficult to suggest the Stock Market is a leading indicator, coincident perhaps but certainly not leading.

Moreover, the biggest decline during the period was a 35.9% drop in 1987, a period in which there was no recession. Furthermore, I circled four areas with very similar patterns in the 1980-1992 timeframe that were recessions following essentially sideways corrections in the S&P 500. Two of them were recessions, two were not.

For the 1981 recession and the 1990 recession, one could only tell there was a recession coming in hindsight. Finally the January 1980 recession vs. the S&P 500 looks like noise. The stock market actually rose at the start of the recession.

S&P Monthly Chart 1998-2009

click on chart for sharper image

There were two recessions in the 1998 – 2009 timeframe. The clearest case that the stock market is leading came in the recession that began in March 2001. However, the recession ended in November 2001 yet the stock market made a substantial new low mid-2002 with a double bottom test in Spring of 2003.

The stock market declined 34% after the recession was over. Is that a leading indicator? Of what?

For the recession that began in December 2007, the S&P 500 was down only a few percent from its all time high. Is that a leading indicator?

Clearly the answer is no. The S&P 500 was a coincident indicator for the entire recession. The NBER has not yet declared the end of the recession but it will do so and it will be backdated, most likely to Spring of 2009.

If so, the market will have proven to have been a coincident indicator, known only in hindsight.

Conclusion

The stock market is at best a coincident indicator, known only well after the fact. Furthermore, even as a coincident indicator, the


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Zero Hedge

Brexit: The Endgame?

Courtesy of ZeroHedge View original post here.

With parliament suspended and the UK's EU withdrawal process in enforced stasis, the next major stop on the Brexit road map is the EU summit in Brussels on 17 and 18 October. As we have become accustomed, no one knows what will happen now.

This flowchart though, based on analysis by The Independent's John Rentoul, runs through the most likely scenarios, starting first with the question of whether the meeting bears fruit in the form of a new Brexit deal.

...



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Phil's Favorites

Wall Street is ignoring the omens of recession - here's why

 

Wall Street is ignoring the omens of recession – here's why

Why is this man smiling? AP Photo/Richard Drew

Courtesy of Jay L. Zagorsky, Boston University

The world is on the brink of a recession, if all the breathless headlines are to be...



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Kimble Charting Solutions

Crude Oil Create A Panic Peak This Week?

Courtesy of Chris Kimble

Yesterday Crude Oil rallied nearly 15%. How often does Crude rally this much in a day? Not often!

How many times has Crude rallied nearly 15% in the past 20-years? Only one other time, which suggests that yesterdays move was a rare event.

This chart looks at Crude Oil on a weekly basis over the past 2-years. Last year Crude Oil created a bearish reversal pattern at the 2018 highs and a bullish reversal pattern at the 2018 lows.

Earlier this year, Crude created a bearish reversal pattern (bearish wick pattern), while testing its 61% retracement level of last years hig...



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The Technical Traders

VIX To Begin A New Uptrend and What it Means

Courtesy of Technical Traders

The news of the drone attack on Saudi Arabia over the weekend prompted a big upside move in Oil (over 10%) and a moderate downside rotation in the US major indexes/stock market.  Although prices had recovered slightly by the opening bell on Monday, September 16, the shock wave resulting from this disruption in oil supply is just now starting to play out.

The long term uncertainty in the markets, as well as the rotation in the US Dollar and other foreign currencies, could play a bigger role in the type of volatility and extend of the immediate price rotation that may result from this external news event.  Our VIX predictions and ADL predictive modeling system are suggesting volatility wi...



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Insider Scoop

3 Takeaways From SeaWorld CEO's Surprise Resignation

Courtesy of Benzinga

SeaWorld Entertainment Inc (NYSE: SEAS) announced Monday evening that Gustavo Antorcha resigned as CEO and board member due to a "difference of approach."

What Happened

Antorcha's resignation will be effective immediately and he will be replaced with CFO Marc ...



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Lee's Free Thinking

Is The Drone Strike a Black Swan?

Courtesy of Lee Adler

Pundits are calling yesterday’s drone strke a “black swan.” Can a drone strike on a Saudi oil facility, be a “black swan.”

According to Investopedia:

A black swan is an unpredictable event that is beyond what is normally expected of a situation and has potentially severe consequences. Black swan events are characterized by their extreme rarity, their severe impact, and the practice of explaining widespread failure to predict them as simple folly in hindsight.

I seriously doubt that no one expected or could have predicted a drone strike on a Saudi oil facility.

Call Me A B...

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Chart School

Crude Oil Cycle Bottom aligns with Saudi Oil Attack

Courtesy of Read the Ticker

Do the cycles know? Funny how cycle lows attract the need for higher prices, no matter what the news is!

These are the questions before markets on on Monday 16th Aug 2019:

1) A much higher oil price in quick time can not be tolerated by the consumer, as it gives birth to much higher inflation and a tax on the average Joe disposable income. This is recessionary pressure.

2) With (1) above the real issue will be the higher interest rate and US dollar effect on the SP500 near all time highs.

3) A moderately higher oil price is likely to be absorbed and be bullish as it creates income for struggling energy companies and the inflation shock may be muted. 

We shall see. 

...

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Digital Currencies

China Crypto Miners Wiped Out By Flood; Bitcoin Hash Rate Hits ATHs

Courtesy of ZeroHedge View original post here.

Last week, a devastating rainstorm in China's Sichuan province triggered mudslides, forcing local hydropower plants and cryptocurrency miners to halt operations, reported CoinDesk.

Torrential rains flooded some parts of Sichuan's mountainous Aba prefecture last Monday, with mudslides seen across 17 counties in the area, according to local government posts on Weibo. 

One of the worst-hit areas was Wenchuan county, ...



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Biotech

The Big Pharma Takeover of Medical Cannabis

Reminder: We are available to chat with Members, comments are found below each post.

 

The Big Pharma Takeover of Medical Cannabis

Courtesy of  , Visual Capitalist

The Big Pharma Takeover of Medical Cannabis

As evidence of cannabis’ many benefits mounts, so does the interest from the global pharmaceutical industry, known as Big Pharma. The entrance of such behemoths will radically transform the cannabis industry—once heavily stigmatized, it is now a potentially game-changing source of growth for countless co...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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Promotions

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