Is the US Stock Market Topping 2?
I don’t normally post on Fridays, but the ABM was just released, and I figured that some readers may want an update.
In “A Warning: US Stocks Topped?”, I wrote that the St Louis Fed Asset Monetary Base could give us an advanced warning of a US stock market decline. I said we needed to see two ‘consecutive declines in the AMB’.
I have placed ‘consecutive’ in parentheses because I discount small one-period rises – like the one in Figure 2. If at the next reading, I see another strong move down, I’ll treat the two declines as ‘consecutive’ despite the intervening small rally.
Let’s see if the next release throws light on the picture.
FIGURE 1 St Louis Fed AMB 2016-10-26