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The S&P500 has just crossed below its 200 day moving average.

Elan

The S&P500 has just crossed below its 200 day moving average.

But the two FRED indicators still disconfirm a recession. As of 2/14/2025. We'll see what they show in the 3/14 release.

But the two FRED indicators still disconfirm a recession. As of 2/14/2025. We'll see what they show in the 3/14 release.

Would you mind sharing those two FRED indicators?


Thanks!

From the 2016 Growth-Trend Timing(GTT) paper.
"GTT directs the moving average strategy [sell signal] to turn itself off during periods when those signals are unanimously disconfirming recession, i.e., periods where they are all confirming a positive fundamental economic backdrop."

The two indicators are Industrial Production: Total Index (INDPRO) "Next Release Date: Mar 18, 2025" https://fred.stlouisfed.org/series/INDPRO

and Advance Real Retail and Food Services Sales (RRSFS) "Next Release Date: Mar 17, 2025" https://fred.stlouisfed.org/series/RRSFS



If both are up year-over-year, that disconfirms a recession.
If either is down over the last year, that signals a possible recession.
Note that the opposite of "disconfirms" is not "confirms". The opposite is "don't know".

If a recession is disconfirmed, then you ignore the 200 day (= 43 weeks = 10 months) SMA sell signal. Otherwise you obey the SMA sell signal.

The SMA buy signal does not look at the FRED indicators.

Whatever emotions you are feeling about the market, there are plenty of articles to tell you to panic ... and plenty to tell you to not panic.
However you feel, there are articles confirming your feeling.

These just came to me in the daily "Must Reads" email:


The World Is Calling His Bluff
The stock market's initial gains in 2025 have been erased due to fears over President Trump's tariffs, which are harming the U.S. economy. Historical ...
Continue Reading
https://seekingalpha.com/article/4764830-the-world...



Don't Freak Out: Market Panic Is Often Misplaced
Despite fears of a trade war, recession and a strong dollar, market panic is often misplaced. Extreme bearish sentiment can signal a market rally. His...
Continue Reading
https://seekingalpha.com/article/4764900-dont-frea...


The U.S. Is Hurtling Toward A Recession
One key indicator signaling an imminent recession is the Atlanta Fed’s GDPNow forecasting model, which updates in real time as new economic data arriv...
Continue Reading
https://seekingalpha.com/article/4764800-us-hurtli...


Dow Jones Holds Support: Tariffs, Data And U.S. Auto Tariff Exemption (Technical Analysis)
US stock markets (Dow Jones, S&P 500) are experiencing volatility due to Trump administration tariffs. A one-month tariff exemption for US automakers ...
Continue Reading
https://seekingalpha.com/article/4765042-dow-jones...

SAHMREALTIME above 0.5 is another possible recession indicator, but this is now followed by the FED and so today it might just be a FED rate cut indicator.

Real-time Sahm Rule Recession Indicator (SAHMREALTIME)
https://fred.stlouisfed.org/series/SAHMREALTIME


======= more GTT links =================
Industrial Production: Total Index (INDPRO)
https://fred.stlouisfed.org/graph/?g=1Eepq

Advance Real Retail and Food Services Sales (RRSFS)
https://fred.stlouisfed.org/graph/?g=1Eepk

Growth and Trend: A Simple, Powerful Technique for Timing the Stock Market, Posted on January 18, 2016
The available monthly signals are:
Real Retail Sales Growth (yoy)
Industrial Production Growth (yoy)
Real S&P 500 EPS Growth (yoy), modeled on a total return basis.
Employment Growth (yoy)
Real Personal Income Growth (yoy)
Housing Start Growth (yoy)

Empirically, for the U.S. economy, the strongest historical recession indicator is Real Retail Sales Growth.
Another accurate recession indicator is Industrial Production Growth.
https://www.philosophicaleconomics.com/2016/01/gtt...

Philosophical Economics’ Growth-Trend Timing (Redux), July 16, 2019
"Like most trend-following strategies, the strength of GTT hasn’t been in generating outsized returns; it has been in maintaining returns while managing losses."
https://allocatesmartly.com/philosophical-economic...

The two indicators are Industrial Production: Total Index (INDPRO) "Next Release Date: Mar 18, 2025" https://fred.stlouisfed.org/series/INDPRO

and Advance Real Retail and Food Services Sales (RRSFS) "Next Release Date: Mar 17, 2025" https://fred.stlouisfed.org/series/RRSFS

I dunno. These don't seem to me like leading indicators. More like coincident or lagging indicators for a recession. If you wait till yoy industrial production and retail sales growth are negative, I'd say you're already well into a recession, no longer predicting it.

Stock market indexes are considered among the best leading indicators for a recession. If you're trying to anticipate where the market is going, more than where the economy is going, I don't see the point of looking at coincident economic indicators.
I know it's nice to have some confirmation for market signals. For example, we had a bigger market drop last July (which didn't cross the 200DMA) and it was a total head fake. So how do you know? Can you ever know? Whatever you try to use, I think confirmation that we're in a recession would be far too late for a market timing decision.

Elan

I dunno. These don't seem to me like leading indicators. More like coincident or lagging indicators for a recession. If you wait till yoy industrial production and retail sales growth are negative, I'd say you're already well into a recession


Have you read the GTT paper?
Growth and Trend: A Simple, Powerful Technique for Timing the Stock Market
https://www.philosophicaleconomics.com/2016/01/gtt...

"Empirically, for the U.S. economy, the strongest historical recession indicator is Real Retail Sales Growth. Since the Census Bureau began to collect and publish it as a series in the late 1940s, it has expeditiously nailed every recession that has occurred, giving only a few false positives. Notice how the blue line consistently crosses below zero at the left sides of the gray columns, the beginnings of the recessions.

Real Retail Sales Growth is a truly fantastic indictor, a direct line into the health of the U.S. consumer, the engine of the U.S. economy."


"Another accurate recession indicator is Industrial Production Growth. With the exception of a single costly omission in the 1974 recession, it’s done a very good job of accurately calling out recessions as they’ve happened."


Stock market indexes are considered among the best leading indicators for a recession.

The indexes are too hair-trigger. They take you out too many times when there is NOT a recession.

People should note that timing is not for increasing your return; timing is for avoiding the worst of bear markets.
The problem is that timing keeps you out of the market in the early stages of the bull market -- which is where the quickest upswing is.

Which leads to an counterintuitive & surprising conundrum . When you are young and far from retirement and still growing your portfolio you are better off overall by NOT doing timing. It is when you are in or near retirement that timing is most valuable, because you don't have the time to wait for the market to recover.

The problem is that timing keeps you out of the market in the early stages of the bull market -- which is where the quickest upswing is.

Somehow I don't have the impression that we are in the early stages of a bull market 😉

And to repeat again what I see and say (on the brk forum) since weeks/months now: S&P and Nasdaq more and more resemble Jim's "rounded top", the slow agonising way he says secular bull markets die. Plus, my beloved CNN index looks ever more "interesting" (click on "Timeline"):

https://edition.cnn.com/markets/fear-and-greed

Plus (yes, I repeat myself from the brk board, sorry) again - as so often during the last weeks - good ol Berkshire, the "Alcatraz", behaves completely different than the indices, goes up while they are falling or at least like today not down while they are falling a full 2-3%. What about that for an "Flight to Safety" indicator?

FYI Oscillators and Indicators YTD

Symbol    TA Events      Date        Type     Close   Period
SPY     MAC(200)       06-Mar-25  LT BEARish  572.71  Daily
SPY     MAC(21)        28-Feb-25  IT BEARish  594.18  Weekly
SPY     TMAC((4,9,18)  27-Feb-25  ST BEARish  585.05  Daily
SPY     MAC(50)        24-Feb-25  IT BEARish  297.21  Daily
SPY     KST(ST)        21-Feb-25  ST BEARish  599.94  Daily
SPY     MAC(21)        21-Feb-25  ST BEARish  599.94  Daily
SPY     DMAC(21,50)    06-Feb-25  ST Bullish  606.32  Daily
SPY     KST(IT)        17-Jan-25  IT BEARish  597.58  Daily

GD_

FWIW the S&P closed above its 200DMA today, by about 0.5%.

Elan

From the bottom of the tech bubble bear market (2003) to today this table tells us how often the S&P 500 has been below its 200-Day Moving Average. The maximum pop, maximum drop and fixed forward returns are shown for 1, 3, 6 and 12 months. These are based on the first date the index goes below its 200-Day moving average.

https://www.zeelotes.org/SP500_Below_200DMA.PNG

Twenty out of the twenty-eight (71%) cases see a drop from the first day below of less than five percent. Just 21% (six cases) see a drop of ten percent or more, and just two exceed 20% - 2007-2009 and 2020. So this is a very blunt tool to say the least!

Today I entered SOXL at 10:26 AM with a price of $19.02 and exited at 12:05 PM with a price of $20.42 resulting in a gain of 7.36% in less than two hours. You can either join the lemmings and run for the hills in the face of volatility or take advantage of it. I choose the latter over the former.

confirmation that we're in a recession would be far too late for a market timing decision.
Truth.

Today I entered SOXL at 10:26 AM with a price of $19.02 and exited at 12:05 PM with a price of $20.42 resulting in a gain of 7.36% in less than two hours. You can either join the lemmings and run for the hills in the face of volatility or take advantage of it. I choose the latter over the former.

Was this done using the method you posted about a while back on using leveraged ETF's on SOXL?

Mark

There are always 2 sides to the coin - especially in markets - that's what makes them function.

I have been following and tracking these for a long time - and here's my take and some technical/mathematical critique
- these indicators are all based on the concept of Conditional Expectations from statistics in any case.

So I will start with one of the most venerated members and Statistician Jim's Bear indicator : DBE.

DBE is "passage of time" class indicator - there's of course the No new high check ( price based) - but its basically a long long noose for the market to try hang itself in some sense. Geometrically (although not assumed) - and for the visually minded - based on my analysis and Jim's past comments it relies on some sort of a "inverse/reverse mirror image" Long tick mark behavior ( I wish I could draw it) - ie a Sharpish drop and then a comeback , but not enough to create a new high - the 100 days ( ~ 5 months) essentially you gives you an opportunity to leave for the door without too much damage often within 5-7% of the peak.

GTT is essentially setup trying to do the same thing. Why?

(i) Fidelity is monthly - very very key. It acts as a smoother. Daily check on something like this is futile. Min should be weekly ( Jim uses an actual smoothing technique IIRC)
(ii)Then comes the Economic indicator check - these are published monthly too - typically in the 3rd week. This means - very likely you would be holding till EOM ( unless you use weekly)

See the pattern - tendency is "Hold...hold....hold..." - Constant second guessing. Rationale should be obvious too - that table from Zee illustrates that easy enough.

All this Recession talk etc to me almost missing the point. If I had a choice for words.....

Anyway, these are the basic premises
(a) Stock fall in a recession. Zee was once kind enough to run this. Absolute truth.
(b) As Elaan and others said - Stock's have been one of the best leading indicators for Recession.... Is it?

As has been mentioned many a time here - the best US Recession indicator has been the Yield Curve model - the ONLY one I know of that signalled prior to COVID ( Q3 2019 - but would you have trusted it sitting right there - without seeing the right side to come?). But its a terrible timer - It went off this cycle in 2022. No recession thus far. It has come back again ( at least my implementation) - so now what?


The point is - you really don't care much for whether it predicts the recession or not - all you need is the following to be true
"Once it signals, will the forward drop be significant enough to take action and thus improve long term draw-down without sacrificing too much returns?"

(1) The 200MA first strike point is literally TERRIBLE in the short term. Its the first part of the inverse tick - ie you will be missing the marginal comeback (not guaranteed of course) and taking the full FIRST BLOW in the chin.
(2) The issue of course is that if 200MA (which is a Statistical slope change indicator) is your only tool in your arsenal - you will be taking the whipsaws as evident from Zee's table.

(3) So therein, comes in the GTT Economic overlay - which basically they claimed ( a bit on this later) to have smoothed out majority of the whipsaws.
Basically, from the point of the confirmation - there was ENOUGH of downside REMAINING in Market ie price action for the overlay to be effective. What it did as a recession indicator is a moot point.

KEY POINT : Why did I use the word CLAIM? GTT was published in 2015-16 IIRC and in-sample was till 2013 or something.

Folks... Unfortunately whether we like it or not - every major Bear catcher which is a combinatorial ruleset has to accomplish only 4 things - it needs to FIT the following periods as best it can - 1929 Crash, 1970s stagflation, 2000s Tech Crash and 2008 Financial crisis - ie 4 time periods. Jim has mentioned this and as has Robbie - simple statistical fact - very low sample incidence.

So really the game ( mathematically) is to actually optimize or minimize the errors on the other side - ie ensure it doesn't go off too much in the Bullish periods.

A good illustration is the ONLY post-discovery recessionary sample we have ie COVID. 200DMA signaled last week of Feb 2020. You had to wait till 3rd week of March for the helluva Economic prints to come out ( I think they might actually have been delayed - which I will discuss in my next point) - and market bottomed what, like 3/21-3/23!

SAHMs indicator ( which I personally think is like a centerfold illustration of an overfit rule) - is based on the Slope of the Unemployment Rate, also failed ( Cant blame her) - initial U/E print came out as 15% in March and I think was revised down to 12.5ish? Taking in all COVID assistance it was close to 25%!!

But - from an economical standpoint you should be able to get behind all of these - they make sense. Key is what do they say about market direction?

And that brings me to my last point - this I refer to as "Wonderful basket of misleading delights" - aka US Economic Releases. The very nice and very defensible thing about them - they are constantly REVISED - some every month! This to accurately reflect the truth - except it embeds one of the biggest bane with market analysis- Look forward bias. When I first read GTT - that was one of the things I checked - source. It uses what essentially you and I can download from FRED.

So Q: That sure shot thing on RRSFS YoY % change - was that of the initial release available say last week of Oct, 1987? or actually the final revised one from Jan , 1988- ahem?


NET :
(1) 200DMA First signal is typically a terrible exit point
(2) The 2 economic overlays from GTT are defensible theoretically, just be cognizant of their biases.
(3) To me DBE is simpler - but that really depends on a "roundish, longish top" assumption - and did TERRIBLY during COVID too.

DBE did worse than GTT in 2022 Bear - DBE exit was June and GTT I think either Mar or April cycle.

Either way - this is not the week to run for cover. Wait it out!

Best

Zee, thank you for this interesting table.

For the "Recovery Date," is that the first date when the SP500's did not cross below the 200DMA at any point during the day?

TGMark asked: Was this done using the method you posted about a while back on using leveraged ETF's on SOXL?

Yes, it is built off of methods I've shared over the years, though I'm unsure which one you are refrencing.

Ismr409 asked: For the "Recovery Date," is that the first date when the SP500's did not cross below the 200DMA at any point during the day?

It is the first date when the SP500 has risen above its 200DMA after being below it. There are times when it bounced above and below a few times before finally staying above and in those cases I chose the last day it was definitely above.

Either way - this is not the week to run for cover. Wait it out!

There are more nuanced ways to and investments to handle this situation. Depending on how much of one's portfolio is in equities, how reliant one is on income, if in retirement with a small margin of safety for the assets to survive a 20+ year retirement / time to recover.

One isn't a "lemming running for the hills" by not executing a 3 hour 3x leveraged trade at a profit. Especially in the bigger context of "identifying points of transition is critical to long term success"., balanced by "The best timing systems produce the fewest signals per year and protect your assets during a bear market." (i.e. not exiting every time there's a 5% drop).

The overlay of unpredictability in White House behavior and the inexplicable use of the tariff hammers has not been mentioned but is THE unique and critical factor driving market behavior at the moment. Will it cause a recession? There's a significant possibility that it will, and that's the current bearish overlay.

There's not just one signal shorter than the 11 month 200DMA signaling caution. The music is getting a lot louder, if not quite yet a crescendo. It may be that I'm a bit too trigger happy in deploying defense. But it saved me 10% in '22, leaving a higher base to build back from in '23.

YMWV!

FC

The issue of course is that if 200MA (which is a Statistical slope change indicator)

The 200DMA that crossed this week is not a slope change indicator. The slope change appears much later, and sometimes never.
For example, there was a bearish 200DMA crossover near the end of January 2022, but the slop of the 200DMA turned negative about three months later, and THAT was a pretty good exit signal. BTW, it triggered about a month before the DBE signal triggered, and that month made a huge difference in the end result. Also, there was a bearish crossover in October 2023, which turned out to be a total head fake. And guess what, the 200DMA slope never went negative at that time.

Either way - this is not the week to run for cover. Wait it out!

Of course. But it got our attention. A good time to brush up on your signals, if that's your inclination, and pay closer attention from here on.

Elan

FC... Things have been pretty horrible from most LT Indicator type standpoint - since early Feb actually.
I am with you - cant afford to lose a lot of my savings so I am defensive.

Except my point was the 200DMA is not the "best" exit transition pointer. Also it hasnt signaled yet ( my weekly version).

Hopefully these help in illustrating my thought process:

Golden-Death Weekly :
https://www.dropbox.com/scl/fi/ta4pctchg91tr9lhf9v...

A shorter and faster one : Jaws been closing fast
https://www.dropbox.com/scl/fi/csyijw5x3ish643a6bf...

And a LT BEar one I built and track: It has crossed the white "Warning zone" and it would be the 2nd time this Bullish cycle. ( The count matters)
and whenever it crosses the Red - it has invariably resulted in a Bear ( 20%+ drop) ...but its late . The small red triangles are for Slope/Turn change ( very very early)

https://www.dropbox.com/scl/fi/jf098qks6l70dla5n3a...

Best

Elan - A moving average cross graphically and mathematically denotes Slope change.

I was not referring to the SP500 Slope ie BCII (my nomenclature - its BCI per GTR) --- NAHL is always first in line so BC 1,2 -SLope, 3 DBE , my parlance.

Best

Elan - A moving average cross graphically and mathematically denotes Slope change.

Not to me it doesn't, neither graphically nor mathematically (same thing). The 200DMA slope changes when it stops rising and starts falling. If yesterday's DMA value was lower than today's, it's rising. If yesterday's DMA value was higher than today's, it's falling.
There's another way of looking at it, which comes directly from the way moving averages are calculated. If today's index level is higher than its level 200 days ago, the 200DMA is rising. If today's index level is lower than its level 200 days ago, the 200DMA is falling. Mathematically.

Elan

Elan - we are saying 2 different things the Slope of SP500 BC is slope of the Moving average itself ie in some sense 2nd order.

An index closing below the 200DMA is change in slope of the index - ie 1st order. Index-with MAs ....it doesnt denote anything about the MA slope

Folks ....let me clarify a few things - these are like back of mind and I have a way of sequencing them which may not be apparent to others.

What are we discussing above here are as follows ( We will stick with the SP-500)

(1) SP-500 closing below its 200DMA. - This is first order CIT ( Change in Trend) call.
(2) SP-500 Below the 200MA ( or Weekly or Monthly equivalent) with 2 Economic Overlays published in the 3rd week of that same month - GTT
(3) Death or Golden Cross - this is a shorter MA like 50DMA crossing the 200DMA: This is mixed order - Moving Averages have embedded lags - typically 1/2 the period
-- so ballpark max( 25,100) - So closer to 100 days ( from the absolute peak)

(4) The BC Slope is Slope ie 1st derivative or relative change of the 200DMA itself - this will absolutely be gradual and CAN and WILL VARY based on geometry .... like a long term range bound market will slowly deteriorate the slope etc. Drawing a 1-to-1 to the above is tough. Hence IMHO - this indicator stands on its own - and deserves the BC moniker! ( I think contributed by Tpoto and improved by Jim?)

Hope this helps!

If today's index level is higher than its level 200 days ago, the 200DMA is rising. If today's index level is lower than its level 200 days ago, the 200DMA is falling. Mathematically.

Elan is exactly right, of course. BearCatcher #3 (or 2), the SMA Slope, is exactly this.
(Some, like me, add a .1% hysteresis band to this to decrease whipsaws).

FC

An index closing below the 200DMA is change in slope of the index - ie 1st order. Index-with MAs ....it doesnt denote anything about the MA slope

You can make up any definition you want. The slope of the moving average as discussed here is the slope of the moving average, not of the index itself.

The S&P index hit an all time high on 2/19/25 and has been on a downward trend since then. It took the index exactly two weeks of dropping until it crossed the 200DMA. In other words, the slope of the index was negative for two weeks BEFORE the day on which you claim that its slope changed. I'm sorry, but you're making no sense.

Elan

Elan.... I know you are one of the long timers here and I would really like to respect that.

:) This is a bit silly!

First let me agree on something you mentioned -"In other words, the slope of the index was negative for two weeks "
Yes this would be correct - Except on a time series it all depends on the periodicity.

Slope is not patented to BC ... Its a mathematical concept which you first learn in Middle School geometry and then in Introductory Calculus.

Its simply the instantaneous rate of change - key is the time period.


"BEFORE the day on which you claim that its slope changed" : I did not make any such claim.

But I have a pretty good understanding of the concept to know that - there has to be a threshold in point in time ie comparison of the 2 derivatives to make this
call.

Ie Prior Slope ( lets call that Slope 1) Calculated between Time point T and T-N compared to a Shorter time Slope(Slope2) Lets say time point T to T-K where N>>K.

TEST : Slope 1> Slope2

Even better would be something like this Slope 2 = Slope between Time points T and T-K and Slope 1= Slope from T-K-1 to T-N in which case they are mutually exclusive.
In this setup you choose K and N ie they are your parameters.

Simple-speak example: Both K and N=1 then in my 2nd setup

Slope2 = Todays Change in price ie 1 day slope
Slope1 = Yesterday's change in price T-1 slope
if the directions dont match - Slope has changed. Mathematical fact.

Utility = ZERO! because this is literally Random Walk.

Everything ie BC approaches are about calling a "definitive" change in Slope ie direction of the curve - in this case the Economic Time Series called Stock Index( that is the mathematical definition) you can define it whichever way you want - that would be your indicator. BCII simply uses a Smoothed proxy of a Long term Price average and calculates the slope of that to make the call on the primary series.


I dont think I can get you on the same page - but I am making perfect sense and crystal clear.

All the best and I have always enjoyed your posts!

Best
Anindua

Well, that was something!

The S&P closed about 2% below its 200DMA, and the slope of the MA looks pretty flat now, although I don't think it has turned bearish quite yet.

Elan

Still ways to go on the Slope.....Here's from one of my Slope trackers ( Defined as the Regression line Slope).
The Violet Circle is the Slope <0 point over last 2 weeks ( IIRC this is how Jim sorta defined it)....it needs to be true for 2 of last 3 bars ( this my smoother)

https://www.dropbox.com/scl/fi/asfvyb6llg3sz883u90...

It's being hammered on an anvil into a different shape.
https://www.youtube.com/shorts/FYVBT1f2cnU

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