We're close to "as good as it gets", but not quite there


The U.S. economy is close to “as good as it gets”, although it’s not quite there yet. You can see this through our Long Term Risk Model.
Long Term Risk typically reaches 80% before historical bear markets start.

*The above chart is a 2 month delayed chart. Members can access the real time chart here.
Meanwhile, the U.S. economy continues to exhibit extreme strength, as seen through NFIB’s Small Business Optimism and Heavy Truck Sales

Small business optimism

NFIB’s Small Business Optimism continues to hover near its highest level ever.

In my reflection from last month, we stated that “this economic expansion is ALMOST (but not quite) as good as it gets”.
Here’s what happens next to the S&P 500 when NFIB Small Business Optimism exceeds 107 (i.e. right now).

As you can see, there are 3 groups of data:

  1. 1983-1984
  2. 2004
  3. 2017-2018

From a long term perspective, this is a good sign for the U.S. stock market. Historically, Small Business Optimism deteriorates long before bear markets start.

Heavy Truck Sales

The latest data for Heavy Truck Sales surged to the highest level in this economic expansion.

As we’ve demonstrated in the past, Heavy Truck Sales tend to trend downwards before bear markets and recessions begin.


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4 comments add yours

  1. Troy, do you use a “melt-up” criteria trying to predict the market top? That is, when the laymen max their credit cards to buy stocks and cab drivers start giving you stock advises? That happened in 1999-2000, do you foresee anything like that this time? Far as I understand, there is still lots of cash on the sidelines, especially given this year’s turmoil.

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