When the S&P500 Outperforms Lumber by 60% in a 1-3 year time window, it has tended to mark important stock market peaks in 3 of the last 4 instances.
The first was in 1995 and the stock market was in a full fledged blast-off stage and didn't look back, but the next 3 signals led to a 12% drop, then the 2001 peak and the 2007 peak in the equity market.
Who knows if the current 750 batting average will hold up, but it is interesting.
Keep in mind the "New Fed Chairman" batting average is 800 (80% correct) for lower "real" stock prices 5 years after a new Fed Chair takes over... see links below.
Have a great weekend.
Tim
The first was in 1995 and the stock market was in a full fledged blast-off stage and didn't look back, but the next 3 signals led to a 12% drop, then the 2001 peak and the 2007 peak in the equity market.
Who knows if the current 750 batting average will hold up, but it is interesting.
Keep in mind the "New Fed Chairman" batting average is 800 (80% correct) for lower "real" stock prices 5 years after a new Fed Chair takes over... see links below.
Have a great weekend.
Tim
Comment:
Time for an update - it's been a year
Comment:
It appears as if we are repeating the pattern from 1998 where there was a market reaction from the S&P/Lumber ratio, which we have had already earlier this year. Back in 1998 we were building the internet bubble which still had 1999 and up until March 2000 to finish.
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