Durable Goods Orders Correlation

Often times, I discuss the fact that there is so much economic data released everyday, it can sometimes get confusing. As far as making money in the stock market, some indicators matter and some don’t.  Some are leading indicators and some are lagging.  Our job is to filter out the noise and concentrate on the ones that matter.  At 7:30 a.m. CST this morning, the durable goods orders report was released.  The estimates were for growth of 0.4%.  Instead, this reported which is often revised later was reported as -2.4%.  The question is whether or not you should pay attention to this as it relates to buying or selling stocks.

Below is a picture of the durable goods order growth/contraction rate since 1989.  It’s gone back and forth between 60% correlated to the S&P 500 and 60% inversely correlated to the S&P 500.  Usually, I put a graph up that helps you make money.  The one below is a picture that will help you avoid losing money by paying attention to the wrong indicator.

durable goods spx correlation 9 25 09

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