This past weekend as I was reading over my reviews on the stock market I ran across a research note I think you will find interesting on the market producing more gains.
This comes from RBC Global Asset Management. They found that when the LEI index (simple measurement of Leading Economic Indicators) was RISING month-to-month AND was already above zero year-over-year, the stock market averaged an 11.8% gain in the following 12 months.
The last time this happened was just before the U.S. presidential election – and the strong market rally then followed. From the RBC note: “Improvement in the LEI is meaningful because stocks have returned an annualized average of 11.8% in periods where the LEI is positive and rising as it is now, compared with just 0.3% when the LEI is positive but falling, which was the case prior to the start of the latest rally.”
As of its latest reading, the LEI continued to strengthen from an above-zero condition.
So what does all this mean… According to this measure, at least, it seems there are prospects for more gains. As always, past performance is no guarantee of future results.