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Market Indicators

MJG
in Fund Discussions
Hi Guys,

Eons ago (actually merely from the mid-1950s) I tried to time the market using a series of market indicator plots. I failed, and really abandoned the technical plot approach a long time ago. But I recognize that a healthy body of MFOers use time plots of various market indicators to signal or inform their buy and sell decisions.

The Ed Yardeni Research firm publishes a nice bunch of these market indicator and sentiment plots each year. This year is no exception. Here are two Links that access a small segment of the Yardeni team effort:

https://www.yardeni.com/pub/peacockbullbear.pdf

http://www.yardeni.com/pub/stmktreturns.pdf

Enjoy. As I said, I surrendered a while ago trying to forecast market movements based on correlating that movement with some of the indicators provided in the Yardeni work. My amateur reading of these types of charts suggest more coincident moves rather than predictive signals. I'm not sure which is the cause and which is the effect. I give up!

Perhaps you guys will find these charts a more predictive tool than I do. I hope so.

If you are not familiar with Dr. Yardeni's credentials in this field, here is a Link to a brief biography about him:

http://www.yardeni.com/pub/stmktreturns.pdf

The usual disclaimer is especially appropriate in his case since I don't endorse his methodology. Smart guys don't always make the smartest investment decisions. As Warren Buffett famously said: " You don’t need extraordinary intelligence to succeed as an investor.” These are words to remember. It's the cumulative investment record that counts and not the accumulated educational credits.

Best Regards

Comments

  • MaryKay
    So many charts that they don't really tell you anything.
  • JunksterJunkster
    edited February 2017
    Back in the 80s and 90s sentiment indicators worked well. Since then not so well. Most likely because sentiment suddenly became en vogue as an indicator with several advisory/newsletter services devoted solely to sentiment springing up. I always worry but as far as indicators go the current lagging junk bond market compared to the S&P has my attention. Albeit lagging may be a misnomer since junk bonds are at all time highs too. Some academicians will argue that junk bonds leads stocks. They certainly did the last bear market bottoming in mid December 2008 a few months ahead of the March 2009 bottom in equities. The acclaimed junk bond guru has been saying (like forever) that junk bond price are outrageously overpriced and in the stratosphere. So if they ever do top and head down that could be problematic for stocks. As an aside, huge difference between a trader and a timer.
  • MJG
    Hi Guys,

    Thanks for your inputs.

    Yes, an almost endless array of charts can and are generated for market forecasting purposes. The trick is to downselect the really effective or edictive subset.

    That's never easy, especially since that subset has changed and will continue to change over time. What worked yesterday will likely not work tomorrow as circumstances and the investing public's perception of what's happening will not be constant with time.

    Best Wishes
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