Unfortunately, no one rings a bell to announce the inflection points in either the economy or the stock market. In our work, in order to get an early jump, we track a number of early-cycle, market-based indicators including various agricultural commodities, several base metals, the Australian Dollar, the Baltic Dry Freight Index, the yield on the 2-Year Treasury Note, etc., etc. Although each of these experiences significant fluctuations on both an intra-day and a weekly basis, all of them have been in unmistakable uptrends since late last Fall. In addition, Ed Hyman’s ISI firm surveys a broad mix of companies each week to see how they view their businesses. These surveys are starting to show a tiny improvement, albeit from very depressed levels. Also, the four week moving average of unemployment claims has turned lower, several Regional Federal Reserve bank business surveys have improved in January, December sales of existing homes rose 6.5% on a month-to-month basis, reflecting lower prices as well as improved availability of financing. These signals should not be ignored.
