Don't Believe the Hype
So what? The Consumer Confidence Index came out sharply higher Tuesday and was immediately hailed as a bullish sign, hence, a likely boost to the stock market. Two things wrong! First, the index is an economic measurement, not a stock market measurement, and economics and stock market prices are hardly in lockstep. Second, if it has any value it is as a coincident indicator, not as a leading indicator, making it valueless as a predictive tool.
Looking at the two charts below, covering the same time frame, it is apparent that the tops and bottoms are nearly coincident, meaning, ironically, that the public, as represented by market levels, is the most confident at tops and least confident at bottoms. So the knee-jerk reaction to a high confidence level is exactly wrong, yet it is invariably touted as bullish....298 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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