Macro Index rebound
The U.S. economy's improvement is evident in our Macro Index, which uses 11 indicators to judge the state of the U.S. economy right now. This index is normally quite effective at giving advance warning for major bear market declines. But the unprecedented nature of the pandemic coupled with the V-shaped bear market caught the index off guard in March 2020. The index was not able to predict the decline, and instead acted as a trend following indicator.
The past month saw an improvement in housing data, which helped propel the Macro Index back above 0.7, a level which if crossed below was historically bearish for stocks.
By the time the Macro Index cycled from below 0.5 (recession territory) back to 0.7, most of the S&P 500's post-bear market gains were already over. The S&P 500 could rally further in the next few weeks ahead, but its return over the next year was no more bullish than random:
As for gold, this usually led to worse than random returns over the next year as safety haven buying subsided:
And for the USD Index, this led to below-average returns over the next few months: