The Chicago Federal Reserve
puts out a monthly report called the Chicago Fed National Activity Index. This report involves 85 indicators of national economic activity. It includes unemployment and hours worked for the employed. It contains data on personal consumption and housing. A summary of sales, orders, and inventories is also part of the report.
The national activity index is basically a barometer for where the economy may be heading. I have listed a table below that includes the monthly CFNAI summary number along with the Dow, the price of oil, and ERX, a leveraged oil ETF. I have done some backtracking on the table to show how these values interact with the stock market. The table below shows normal conditions after a recession has happened, and while the economy is recovering. I stopped recording in May of 2014 because I had enough data for growing stock market scenarios. In the future, when we enter a recession, I will start recording data again to show why you should be out of stocks in bad times. For example, a -1.00 for the CFNAI would mean we are in a recession or very close to it. We are safe as long as the CFNAI is listed as fractional numbers rather than whole negative numbers.
The report actually is delayed by almost a month for the activity it is reporting. In other words, the June report is covering May economic conditions. The report is still useful for predicting whether the stock market will rise or fall. For example, we had a great fall and winter rally in stocks for 2011-2012. The December CFNAI report showed .68, January came in at .30, February was .19, and March was -.64, which showed an economic slowdown after the previous three months had been positive. Of course, the March report actually appeared in April, but it was a definite sell signal for stocks. In other words, you should have been invested in the stock market from December through April. Then, you should have taken profits.
ERX is used as a stock that does well when the stock market is going through a bull rally, and it declines when recession fears are abounding. Whenever the economy is doing well, oil demand is a lot higher, and the price of oil rises. You could buy ERX when it is selling for $32 or less, and sell it at $50 for a gain of more than 50%. This is a past scenario, though. A future chart might have ERX oscillating between $45 and $65. So, you will need to do your own research to determine if ERX is worth trading during different time periods.