Every month a report called the Leading Economic Indicators is released and for January, reported this week, it was up .8% from shrinking .3% the month before. This gauge is attempting to predict the future direction of the U.S. economy. It is believed to foretell us 3 to 9 months out. One month of a negative number is probably not significant especially when followed by an up number. If it was to shrink three months in a row then that would be a very convincing predictor.
One of the ten components of the LEI report is the stock market itself. Investors and traders have been very accurate in predicting the direction of the economy. In 2008, stocks began to look weak long before the economy actually showed signs of a recession. So watch the direction of the market, but also the direction of bonds. Often the bond market will lead the stock market.
It never gets easy!