The blue line is the SPX (S&P 500)
The indicator is being plotted on SPX/NCBEILQ027S (Nonfinancial Corporate Business; Corporate Equities; Liability, Level), it shows the % difference from the 20 week moving average with Bollinger bands on each side.
This ratio is intended show if the SPX is running hot or cold vs the what the FED values the equities at. now the market can trend overvalued or trend undervalued but as long as the economic valuations growth with it you are not going to get a spike one way or the other. The spikes would indicate the release of the FED quarterly valuation, so if you get new data that is really bad, you are going to get a spike up saying the markets are overvalued to their true value, and vise versa.
I marked on the chart each time following the this logic that you buy if it spikes throw the lower boulenger band (Green) and sell if it spikes through the upper boulenger band (Red).
You can see this it almost always detects when there is going to be a major sell off and it nearly always detects the bottom.
The one thing it does not seem to detect are major tops that are do to worse and worse economic conditions as the market is rolling over with the FED valuations so the drop in price is a reality of the real value per the FED. So you will want to use this in conjunction with other economic indicators such as the yield curve.
Currently the market is trending a little high but the we have no overvalued signal. If the economic data for Q4 which releases March 9th comes back bad, then we may be a spike up which would indicate a sell.
Thought i would share as i thought it was really interesting.
Nonfinancial Corporate Business; Corporate Equities; Liability, Level:
These tables present a sequence of accounts that relate production, income and spending, capital formation, financial transactions, and asset revaluations to changes in net worth between balance sheets for the major sectors of the U.S. economy. They are part of an interagency effort to further harmonize the BEA National Income and Product Accounts (NIPAs) and the Federal Reserve Board Flow of Funds Accounts (FFAs). The structure of these tables is based on the internationally accepted set of guidelines for the compilation of national accounts that are offered in the System of National Accounts 1993 (SNA).
The indicator is being plotted on SPX/NCBEILQ027S (Nonfinancial Corporate Business; Corporate Equities; Liability, Level), it shows the % difference from the 20 week moving average with Bollinger bands on each side.
This ratio is intended show if the SPX is running hot or cold vs the what the FED values the equities at. now the market can trend overvalued or trend undervalued but as long as the economic valuations growth with it you are not going to get a spike one way or the other. The spikes would indicate the release of the FED quarterly valuation, so if you get new data that is really bad, you are going to get a spike up saying the markets are overvalued to their true value, and vise versa.
I marked on the chart each time following the this logic that you buy if it spikes throw the lower boulenger band (Green) and sell if it spikes through the upper boulenger band (Red).
You can see this it almost always detects when there is going to be a major sell off and it nearly always detects the bottom.
The one thing it does not seem to detect are major tops that are do to worse and worse economic conditions as the market is rolling over with the FED valuations so the drop in price is a reality of the real value per the FED. So you will want to use this in conjunction with other economic indicators such as the yield curve.
Currently the market is trending a little high but the we have no overvalued signal. If the economic data for Q4 which releases March 9th comes back bad, then we may be a spike up which would indicate a sell.
Thought i would share as i thought it was really interesting.
Nonfinancial Corporate Business; Corporate Equities; Liability, Level:
These tables present a sequence of accounts that relate production, income and spending, capital formation, financial transactions, and asset revaluations to changes in net worth between balance sheets for the major sectors of the U.S. economy. They are part of an interagency effort to further harmonize the BEA National Income and Product Accounts (NIPAs) and the Federal Reserve Board Flow of Funds Accounts (FFAs). The structure of these tables is based on the internationally accepted set of guidelines for the compilation of national accounts that are offered in the System of National Accounts 1993 (SNA).