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Strategies & Market Trends : The Amateur Traders Corner -- Ignore unavailable to you. Want to Upgrade?

To: Frederick Langford who wrote (14332)	9/29/2001 5:25:34 PM
From: Tom Hua	Respond to of 19633

Fred, interactive.wsj.com Taking these six cases, then, we find the market is actually a rather poor leading indicator of the onset of recession, but an uncannily good leading indicator of the end. That is, it doesn't always fall just prior to recession, but it always bottoms out prior to the end. For example, the 1990-91 contraction lasted eight months. By the middle of the third month, the S&P touched its low and then finished 25% higher by the end of the eighth month. Similarly, the 1981-82 recession lasted 16 months. The market hit a low by the eighth month, fell back to the same low by 11th month, and then finished nearly 30% higher by the recession's end. So, if Sept marks the onset of a recession, the market will hit a bottom in January/Feb assuming this recession will last 8-12 months. Poll: 4 for 0 bp 7 for 25 bp 9 for 50 bp Regards, Tom