Economic Indicators and the Market: Interesting Data from a Great New Site

Jeff Miller
How does the market respond to "better than expected" economic data?
Some may be surprised at the research finding reported by Bespoke Investment Group. Paul Hickey and Justin Walters look at economic releases from the last sixteen months. There is actually a slight negative correlation between better-than-expected data and gains in the S&P 500. Check out their site for the complete results.
The names of the Bespoke authors should sound familiar, since Paul and Justin are known for developing the popular TickerSense site. Paul has earned one of our highest accolades: We turn off the mute button when he is on CNBC! In just a few days they have already created a lot of interesting content. The articles at Bespoke (now on our blogroll) feature the nice-looking charts that are a hallmark of their work.
Our Take
Trading based upon economic indicators is quite treacherous, as we discussed in our article on this week's ISM manufacturing report. As Bespoke points out, stock traders have been preoccupied with concern about Fed policy.
In a time period when everyone is watching to see if the Fed can hit the Glide Path, economic strength may not be perceived as bullish. It would be interesting to look at a longer time period and separate inflation measures (high inflation is always bad) from general economic strength (which can actually be "too hot").
Meanwhile, this is a good research question and an interesting first look at the topic.