IM Business Cycle Index Warns of Coming Recession – Update 1/15/2023

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Fall warning green road sign on dramatic clouds and sky.

Fever

BCI is above last week’s level at 262.0, warning that BCIp may reach 18.2 to 27.6 (see Figure 1, magenta curve) earlier than last week’s performance, but not much later.

iM business cycle directory

Figure 1 combines the BCIp, BCI, BCIg, and S&P 500 with levels (red lines) that must cross to call a recession. Here we notice that BCIp 25 has passed the threshold strongly downwards. Historical data from past recessions shows that at this value the economy never recovered enough to avoid collapse. (iMarketSignals)

iM business cycle directory

Figure 2 plots the trajectories of BCIw over past recessions and the current value of BCIw and its end point versus the mean values ​​of past recessions. (iMarketSignals)

Table 1: Avoidance of losses in Spy when issued with BCIg failure warning.

Note

1

2

3

4

5

6

7

8

Economic recession

PEq

SEnel

TRough

(PT)/P

(ST)/S

(PT)

(ST)

(ST)/(PT)

January -70

106.16

93.24

69.29

36.1%

25.7%

36.87

23.95

65.0%

Dec-73

120.24

103.36

62.28

48.2%

39.7%

57.96

41.08

70.9%

February -80

115.2

100.3

98.22

17.1%

2.1%

16.98

2.08

12.2%

August-81

140.52

128.64

102.42

27.1%

20.5%

38.1

26.22

68.8%

August-90

368.95

332.92

295.46

19.9%

11.3%

73.49

37.46

51.0%

April-01

1520.77

1326.82

965.8

36.8%

27.2%

554.97

361.02

65.1%

January -08

1565.15

1508.44

676.53

56.8%

55.2%

888.62

831.91

93.6%

Average all recession

34.6%

25.9%

60.9%

Column Notes:

  1. The S&P 500 peaked in the 1-year period before the Great Recession
  2. S&P 500 on iM-BClg signal day
  3. S&P 500 pool during recession
  4. % – loss from tip to trough
  5. % – removed from signal to traf loss
  6. Absolute loss from peak to trough
  7. There is no absolute loss of signal to traf.
  8. % edge-to-edge loss removed

iM business cycle directory

iMarket signals

iM business cycle directory

iMarket signals

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