Fundamental Stock Market Indicator

The S&P 500 closely tracks my Fundamental Stock Market Indicator (FSMI). The FSMI is a very good coincident indicator that can confirm or raise doubts about swings in the market. It advanced for the seventh straight week, climbing 1.0% during the first week of March and 14.7% over the seven-week period. It’s now only 0.1% shy of its cyclical high posted in February 2011.

The FSMI is the average of our Boom-Bust Barometer (BBB) and the Weekly Consumer Comfort Index (WCCI). Here’s how they performed during the week of March 3:

(1) The BBB increased for the sixteenth time in 18 weeks, up 0.1% w/w and 16.4% over the 18-week period. It’s now within 3.5% of its record high posted last March. Jobless claims--a component of our BBB--edged up to 355,000, based on 4-wa, after falling to 354,750 the prior week (which was the lowest reading since March 2008). The CRB raw industrials spot price index, another component, has been climbing again in 2012, though is stalled at recent highs.

(2) Bloomberg’s WCCI jumped 3.4% after slipping 0.6% the prior week (which was only the second decline this year). The index is at its highest reading since April 2008, moving out of its multi-year flat trend. (More for subscribers.)