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Stock Market Indicators

I use the following three indicators to predict the behavior of the stock market:

  1. Energy prices. The two prices I monitor are crude oil and natural gas. Every single business and every single consumer experiences higher expenses when these prices increase.
  2. Interest rates. High interest rates not only dampen economic growth (and sometimes cause recessions), but they also compete for investment dollars. Why invest in the stock market if safe, interest-bearing investments yield a high rate of return?
  3. Business cycle. If the stock market and economy have been growing in a speculative fashion, expect a decline when the other two indicators are not favorable.
At this point, the indicators do not bode well for the stock market. The only positive factor is that the price of natural gas has actually plummeted since December of last year.

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