Is a Recession Imminent? The Fed's Leading Indicator, Which Hasn't Been Wrong Since 1966, Offers a Clear Answer.
When examined over long periods, Wall Street's three major stock indexes -- the widely followed Dow Jones Industrial Average (DJINDICES: ^DJI), broad-based S 500 (SNPINDEX: ^GSPC), and growth-dependent Nasdaq Composite (NASDAQINDEX: ^IXIC) -- have risen in value, without fail.
But it's a far different story when the lens is narrowed to mere months or perhaps a few years. The Dow Jones, S&P 500, and Nasdaq Composite, just like the U.S. economy, can be completely unpredictable over shorter timelines. In fact, all three stock indexes have traded off bear and bull markets in successive years since this decade began.
Truth be told, there is no perfect forecasting tool or ideal blueprint that's going to, with 100% accuracy, tell investors or economists what stocks or the U.S. economy will do next. Nevertheless, there are a couple of predictive tools and money-based metrics that have, over extended timelines, correlated strongly with moves in the stock market and/or U.S. economy.
Source Fool.com
