Data Backs Up Stock Gains

There is an almost limitless set of data out there you can compare to stock prices in an effort to understand what is happening. The most common measures have been used for decades and lags the market considerably which brings into question its effectiveness. But here at Capital 19 we like to find new ways of doing things and so have been looking at new datasets. What we found is intriguing.

The first one we looked at was the Dallas Federal Reserve Mobility and Engagement Index, which tracks the degree to which Americans are moving around by tracking where their mobile devices are. Below you can see this dataset almost perfectly mirrors stock prices with a three-week lag.

Another similar set of data is the TSA Passenger throughput data. Similar to the broad mobility index, this dataset has also closely matched stock prices

How to use this data?

What we can see here is stock prices LEADING the datasets by about 3 weeks, providing compelling evidence of why stocks are a LEADING indicator of economic activity in general. Stock prices would suggest economic activity to pick up over the next few weeks.

As investors, the biggest value from these datasets is to prove equity prices are correct. We often find ourselves starting to doubt how prices can be so high when things are so bad economically, but as you can see from the graph, we have nothing to fear, stock prices have led the recovery all the way and these datasets are confirming the bull market. Stay long and do not doubt the strength of the American economy.