Lakewood, CO, December 07, 2009 --(PR.com
)-- The Consumer Metrics Institute has reported that its primary Consumer Leading Indicator (the 'Weighted Composite Index') peaked in mid August and has been declining since. The index, which leads the S&P 500® by an average of about 140 days, reached its recent highest level on August 13th, more than 115 days ago. Based on a statistical analysis of how their index has led past market cycles, the Consumer Metrics Institute has calculated that the next peak in the equity markets is likely (with about 68% confidence) to fall during December or January. Given that their Weighted Composite Index already reached its 2009 peak more than 115 days ago, their statistical analysis further indicated that the probability that an equity market top is happening now (or has already occurred) has risen to nearly 20%.
Additionally the Consumer Metrics Institute monitors how the S&P 500® has performed historically during the 90 days after their Weighted Composite Index has reached certain values. According to their studies the probability of a positive price performance for the S&P 500® over the next 90 days has dropped to less than 50%. This is down significantly from early September, when the same analysis signaled a greater than 90% probability of a positive price performance for the S&P 500® over the ensuing 90 days. This indicator has recorded increased market risk before, especially in late July 2008 when the same analysis indicated a less than 10% probability of a positive price performance for the S&P 500® over the following 90 days.
"Is it time to abandon the equity markets?" said Richard Davis, President of the Consumer Metrics Institute. "Certainly not. But we have probably reached the point where we should increase caution to levels that have not been statistically warranted since the spring of 2009. The bottom line for a prudent investor is always 'diligence', but never more so than when market tops or bottoms have become more likely."
About the Consumer Metrics Institute:
The Consumer Metrics Institute publishes a set of indexes reflecting day-to-day changes in consumer interest towards major discretionary purchases. These indexes are updated several times per week and are available free of charge at the Consumer Metrics Institute website. Complete historical tables of the indexes are also available for download by members of the Institute.