The Five Forecasters are signaling economic growth and the continuation of the bull market. The yield curve and LEI are sending positive signals, while market breadth offers confirmation of the bull market. Two indicators, PEs and the ISM Manufacturing Index, are flashing some warning signs, but we believe these five indicators, collectively, are signaling a mid-to-late cycle economy and continuation of the seven-and-a-half-year-old bull market. We may see a pickup in stock market volatility and returns may be modest over the next year or two, but our favorite leading indicators and our general assessment of the macroeconomic backdrop suggest more gains for stocks may potentially lie ahead.
Burt White is chief investment officer for LPL Financial.