iM’s Business Cycle Index Warns A Looming Recession – Update 1/15/2023


enthusiastic

The BCI at 262.0 is above last week’s level, raising the BCIp from 18.2 to 27.6 (see Figure 1, magenta curve). It warns that past performance suggests that a recession could be as early as 14 weeks away, but at least sooner.

iM business cycle index

Figure 1 plots the BCIp, BCI, BCIg, and S&P 500 along with the threshold (red line) that must be crossed to declare a recession. Here the BCIp is well below the 25 threshold. Historical data from past recessions show that at this value the economy never recovered to avoid a recession. (iMarket Signals)

iM business cycle index

Figure 2 plots the current value of BCIw along with the trajectory of BCIw through past recessions, ending at the best average of past recessions. (iMarket Signals)

Table 1: SPY loss avoidance when exiting on BCIg Recession Warning.

Note

1

2

3

Four

Five

6

7

8

recession

P.Eek

S.signal

T.rough

(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%

December 1973

120.24

103.36

62.28

48.2%

39.7%

57.96

41.08

70.9%

February 2080

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 2001

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 of all recessions

34.6%

25.9%

60.9%

Column notes:

  1. S&P 500 peaks in the year before recession
  2. S&P 500 iM-BClg Signal Date
  3. The S&P 500 bottom during a recession
  4. %-peak to trough loss
  5. %- avoid loss from signal to trough
  6. Absolute loss from peak to trough
  7. Avoid absolute loss from signal to trough
  8. Percentage of peak-to-trough losses avoided

iM business cycle index

iMarket Signals

iM business cycle index

iMarket Signals



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