Ed Yardeni’s Magical Stock Market Indicator (What Happens Next?)

…on Yardeni , stocks , CRB Raw Industrials , initial jobless claims , consumer confidence.
Years ago I stumbled upon this interesting stock market indicator created by famed strategist Ed Yardeni. I was intrigued because contrary to most equity models, Yardeni’s formula did not include the traditional inputs of earnings or interest rates.
Convinced it was just some sort of statistical fluke, I modeled it up in my Bloomberg and have been following diligently ever since. Every time Ed’s indicator has diverged from the S&P 500 I think to myself the time for the model to stop working has finally come. Yet, strangely, almost as soon as that thought crosses my mind, the series recouple.

This post was published at Zero Hedge on Feb 9, 2017.

 

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