A composite of the ISM Manufacturing and Non Manufacturing New Orders indexes, not seasonally adjusted, has had a very strong correlation with stock prices since 2008, with a lead time of 3-6 months. The indicator is still in a bullish mode, but much weaker than last year and slightly weaker than 2010. A drop below the 50 level seems to be the kiss of death for stock prices. For now, the bulls have it.
I have backed out the seasonal adjustment hocus pocus and weighted the index according to the relative weighting of manufacturing and services to the US economy. Note that this index includes only the New Orders components of the ISM Composite Indices. It is not based on the seasonally adjusted Composite indices reported by the ISM.
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