Wednesday, February 22, 2012

Fundamental Stock Market Indicator

The S&P 500 is back at last year’s peak, which puts the index 101% above its March 9, 2009 cyclical low. It remains 13% below its record high of 1565.15 on October 9, 2007. Our Fundamental Stock Market Indicator (FSMI) is also flirting with its 2011 high. As of the week of February 11, it was at 104.2, up 106% from its cyclical low of 50.6 during the week of April 4, 2009. Last year’s peak was 108.7 during the week of February 26.

Holding the FSMI down since 2009 has been the Weekly Consumer Comfort Index (WCCI), which has been hovering in a range between 45 and 60 (WCCI plus 100) since early 2008. It has risen just over the top of this range to 60.2 during the week of February 11 from 55.2 at the end of last year.

The other component of the FSMI is our Boom Bust Barometer, which is the ratio of the CRB raw industrials commodity spot price index to initial unemployment claims. It had a V-shaped recovery from the week of March 28, 2009 through the week of March 12, 2011, when it soared from 50.8 to 159.6, which just slightly exceeded the previous cyclical high during the week of August 11, 2007. It then dipped to an October 29, 2011 low of 132.3. But it is back up to 148.1 during the week of February 11. (More for subscribers.)

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