Leading indicators
Traditionally the index of leading economic indicators has been down by about 3 percent around the time a recession was called, on a rolling six-month basis. It's now up 1.1 percent.
The yield curve
Since 1960, the yield curve—the gap between the yield on the 10-year and one-year Treasuries—has been inverted at negative 0.8 percent ahead of a recession. Today, there is a positive quarter-percent gap between the yields.
Stovall does think the stock market is overvalued by about 7 to 8 percent by some measures, so "a pullback of 5 to 10 percent would be refreshing. Since the market overreacts, a pullback could even become a correction, he said. He sees that as good news, too, saying it would presage a recovery.
Recession talk heartens Stovall. "When everyone feels optimistic, there is no money left on the sidelines to propel prices," he said. "Now, we still have room to go through the FOMO phase."
This article was provided by Bloomberg News.