FIVE FORECASTERS: FEW WARNING SIGNS
John Lynch Chief Investment Strategist, LPL Financial | Jeffrey Buchbinder, CFA Equity Strategist, LPL Financial
Our favorite leading indicators are signaling that further economic growth and stock market gains lie ahead. With the bull market celebrating its ninth birthday on March 9, we looked at some of our preferred leading economic and bull market indicators. We included LPL Research’s proprietary “Over Index” and two of the Five Forecasters (the Conference Board’s Leading Economic Index and stock market breadth), in an effort to help assess the likelihood that the bull market will reach its tenth birthday in a year. This week, we will look at the remaining three forecasters: the Treasury yield curve, the Institute for Supply Management (ISM) Manufacturing Index, and stock valuations. Historically, these indicators—which are summarized in our Recession Watch Dashboard—have collectively signaled a transition to the latter stages of the economic cycle and an increased potential of an oncoming recession and bear market.