Ed Yardeni’s Magical Stock Market Indicator (What Happens Next?)

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zerohedge.com / by Kevin Muir via The Macro Tourist blog / Feb 9, 2017 2:20 PM

…on Yardeni , stocks , CRB Raw Industrials , initial jobless claims , consumer confidence.

Years ago I stumbled upon this interesting stock market indicator created by famed strategist Ed Yardeni. I was intrigued because contrary to most equity models, Yardeni’s formula did not include the traditional inputs of earnings or interest rates.

Convinced it was just some sort of statistical fluke, I modeled it up in my Bloomberg and have been following diligently ever since. Every time Ed’s indicator has diverged from the SP 500 I think to myself the time for the model to stop working has finally come. Yet, strangely, almost as soon as that thought crosses my mind, the series recouple.

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