{"id":62096,"date":"2025-07-05T07:17:44","date_gmt":"2025-07-05T07:17:44","guid":{"rendered":"https:\/\/thepatientinvestor.com\/?p=62096"},"modified":"2025-07-05T07:17:44","modified_gmt":"2025-07-05T07:17:44","slug":"us-market-leading-indicators-7","status":"publish","type":"post","link":"https:\/\/thepatientinvestor.com\/index.php\/2025\/07\/05\/us-market-leading-indicators-7\/","title":{"rendered":"US Market Leading Indicators"},"content":{"rendered":"
\n
\"Bull\/Bear<\/div>\n
\"Stock<\/div>\n<\/div>\n

The gauge on the left indicates bull or bear market status, and the one on the right reflects stock market drawdown risk.<\/p>\n

Bull\/Bear Market<\/h2>\n

The Bull\/Bear indicator remains at 60%, with two of five leading indicators signaling risk-off:<\/p>\n

\"Bull-Bear<\/p>\n

The declining Fed Funds target rate indicates monetary easing, a bearish sign for the economy, while the University of Michigan survey of current economic conditions also warns of recession. However, the other two composite indicators are bullish: the Chicago Fed index of national financial conditions signals strong liquidity, and S&P 500 smoothed momentum remains positive.<\/p>\n

In June, employment in cyclical industries\u2014manufacturing, construction, transportation, and warehousing\u2014grew by 10K.<\/p>\n

\"Cyclical<\/p>\n

Unemployment declined to 4.1%, but weekly continued claims are trending upward, warning that the labor market is deteriorating.<\/p>\n

\"Continued<\/p>\n

Also, aggregate hours worked declined in June, with year-on-year growth slowing to 0.8%. GDP growth is likely to follow.<\/p>\n

\"Aggregate<\/p>\n

Stock Pricing<\/h2>\n

Stock pricing increased to 97.44, compared to a low of 95.04 eleven weeks ago and a high of 97.79 percent in February. The extreme reading warns that stocks are at risk of a significant drawdown.<\/p>\n

\"Stock<\/p>\n

We use z-scores to measure each indicator’s current position relative to its history, with the result expressed in standard deviations from the mean. We then calculate an average for the five readings and convert that to a percentile. The higher that stock market pricing is relative to its historical mean, the greater the risk of a sharp drawdown.<\/p>\n

The S&P 500 PE ratio is based on highest trailing earnings to eliminate distortions caused by sharp earnings falls during recessions. The current value of 28.5 is close to the 97th percentile of readings over the past fifty years.<\/p>\n

\"S&P<\/p>\n

Conclusion<\/h2>\n

We are in the early stages of a bear market, with the bull-bear indicator at 60%. However, extreme stock pricing increases the risk of a significant drawdown.<\/p>\n

Acknowledgments<\/h4>\n