How Do I Know Whether The Market Is Going Up Or Down? Take A Look At Economic Inflection Points
Investor strategist Liz Ann Sonders, with Charles Schwab believes that the direction of the markets can always be determined by looking at economic inflection points. Basically, the market starts to recover and move back upwards when the economy is at its point of maximum weakness. So when the economic data is the most dire, and the situation seems at its worse, that’s when the numbers will begin to improve. This is why it’s important to look for these inflection points in the economy, rather than waiting around for the all clear sign for investors. If you wait till it’s looking good, you will have missed the opportunities available as the stock market makes its ascent.
Diffusion Indexes Utilize Economic Indicators To Forecast Movement In The Markets
Sonders herself utilizes diffusion indexes put out by the economic consulting firm ISI, which track down the high frequency economic indicators. They generate their prediction by measuring strength, minus weakness, and are surprisingly very accurate. The diffusion indexes have just begun to go up, which indicates that the markets will continue on the upswing for awhile now. The global indexes, however, have not taken off yet, meaning it would be wise to sit tight and wait around for more conclusive data before pulling the trigger on an investment in the global market.
The Diffusion Indexes Indicate The US Markets Are Improving
The economic indicators have shown that the improvements in the manufacturing/non manufacturing sector, combined with the boost in consumer confidence, strong retail sales and better housing data, that the US economy, for the time being is climbing out of the muck. As a result, the US market numbers could be well on the rise over the upcoming months.
Based on the information from the diffusion indexes, it would be wise to evaluate your position to ensure your investments are properly situated for whatever the next several months bring. For more information on how to invest wisely given today’s economy contact a redhawk advisor today.