ECRI the leading indicator

Do Economic Indicators Show U.S. in Recession?

On Nov. 29, 2012, ECRL co-founder and COO Lakshman Achuthan displays economic indicators he believes to show that the United States in currently in recession. He speaks on Bloomberg Television's "Bloomberg Surveillance."

It is very self-explanatory. There are couple macro indicators discussed and showed here. Lakshman said recession started in July. Jobs is the only one not agreeing, the reason is contraction of labor force. He also mentioned in 3 of 7 the last recessions jobs increased into the recession.

When people asked other indicators, he said GDP is only quarterly, (which may not be up to date, and may be too slow to spot trend change) and stock market and risk assets give signals, but the signals are distorted here.

tbd

Update 11/19/2012

This market is getting harder to trade. Currently I break the movement down this way.
ES (the SPX futures) retreated to 1360 to reflect uncertainty about Obama's second term. Then the Israel news pushed 20 points further to 1340. Friday afternoon we got good news from the congress. SPX soar 20 points. Then over the weekend middle east cooled down. So now we are back at ES 1380 area.

1380-85 is a good resistance area, defined by last drop. There is a pretty reliable 1on1 bearish pattern on ES hourly. Also 200 day MA is at SPX 1382. These things are going to hold the market for a while. Then we can figure out which direction the market wants to go.

Add chart:

3 push pattern

To clarify based on some questions I received, unless specified, all my point levels are based on ES, which is the tick of futures of S&P 500 (the tick is SPX). There are bunch of materials on the relationship between cash index and futures. The difference is mainly due to dividends and time value.
Here is my simplified explanation. ES futures are quarterly. At the beginning of the quarter, the current ES is about 5 points lower than SPX. During the quarter, the difference gets smaller. At the futures expiration, they equal to each other.

I guess I get what I am asking for. In last post, I showed my setup of the 3 push pattern and mentioned my target of ES 1365-70 ares.

Friday morning, the chart looked like this.

I was in a hurry. I didn't have chance to mark my chart, because I was buying the dip. I told 1 friend

I was not far off again. I exit ES longs at 1382.5 around 11:00 and happily took the rest of the day off. ES actually went to 1388, slightly higher than my mid-1380 target then head down to 1372.

My chart above actually tells my trading plan. I still have some calls. I think the recovery will take a while. I guess ES may test 1400 to confirm the break-down. That could be a good chance to exit long and go short again.

(nothing) lots to say - updated

As I said the street favors Romney. They didn't get their candy this time. As usual they put on the drama now. Somebody is calling bottom. I am conservative this time. I think the battle around neckline SPX 1400 is far from over. Volatility is heading up. I expect it to go even higher.

(1 of my readers don't trade equity. I guess he can handle Bond well. :D Me nice enough to translate my expectation into plain English:
This means I guess index won't move too much, but will be very volatile like yesterday. Intra-day range will be bigger.)

It's the best time for trading. If you don't like trade, then think about reduce your exposure and just wait on the side.

(to add charts)

This is not a typical flag, as the correction took too long and too flat. However, it is a rectangle correction. The next movement is always powerful. If I have to guess the points, I am targeting ES 1365-1370 area, which is 1370ish SPX.

I discussed weekly RSI with a friend HD. I believe it is not oversold yet. We still have room to go down.

Pattern-wise, this is the 3 push pattern I am expecting. I think there will be 3 pushes to the down side, but it does not mean it could be only 3. Anyway my bias is to the down side.

Add: 
My friend CR sent me this link. It is on the Hindenburg Omen I discussed a while ago. Th author says Hindenburg Omen is about to issue the first signal. What to expect?

Here's how it works:

1. Once an initial signal has been issued, a second signal (the 'confirming signal') must be attained within 36 days [Dr. Robert McHugh].  That confirming signal could happen the next day or the next week.

2. When the "confirmed HO signal" has been issued it is valid for 30 trading days [Jim Meikka, creator of the HO].

3. Once an official HO signal has been issued in accordance with the two rules above, the odds of various corrections occurring are as follows, according to the records of Dr. Robert McHugh. These are not predictions nor speculative guesswork. They are a cast in stone record of what has happened in the past.


here's how it breaks down based on past performance:

Major Crash - 27% probability
Selling panic of at least 10-15% - 39% probability
Sharp decline of at least 8-10% - 54% probability
Meaningful decline of at least 5-8% - 77% probability
Mild decline of at least 2-5% - 92% probability
The HO signal is an outright miss - 7.7% probability (one out of 13 times)


Here comes Ron Walker and his famous BPI