On Economy

I found something interesting on web. I want to document it here for future reference.

by ocassional observer » Wed Jul 27, 2011 4:05 pm

john hussman has a list of conditions that have preceded or coincided with recessions 100% of the times:

·         10 yr treasuries below 6 month ago-V,

·         spread 10 yr-3yr bonds smaller than 3.1%-V, 

·         ISM manufacturing under 54-V,

·         nonfarm payroll growth less than 1.3% from a year ago-V,

·         a widening in spreads between corporate and treasuries from 6 months ago (i use barron's confidence index instead)-V

·         and the last- equity markets lower than 6 months ago- on the verge.

Here is the website of John Hussman. I am going to do more research on him and his study. In general, I like his ideas.

Today, ocassional observer posting another interesting post.

I would like to point your attention to a little followed indicator called the credit suisse fear barometer. a peak in this indicator as led every peak in the market by ~7 days since the beginning of the year. it has recently confirmed an intermediate top by falling dramatically as the 6m graph shows.

a 5y chart shows that we are at heightened levels similar to the one that preceded the bear market start in 2007.

i believe a break down of this indicator below the 20 level will sign, together with the economic indicators i mentioned at yesterday's close, and what i now believe is a confirmed dow theory sell signal from the beginning of july, the start of a bear market and a coming us recession.
the indicator is updated daily at bloomberg several hours after the close:http://www.bloomberg.com/apps/quote?ticker=CSFB:IND
a definition exist there as well.

Again I like this idea too. I will keep on monitoring this indicator for further analysis and application.