Rebounding economic activity

The Conference Board LEI's latest reading demonstrates that the U.S. economy continues to improve. We can see this in some of the LEI's components, such as initial claims and ISM new orders. 

The LEI, which crashed in March, still has a long way to go before it makes a new all-time high. But still, this is an improvement. Historical cases in which the Conference Board LEI crashed to a 5 year low and then increased 4 months in a row led to more gains over the next 6-12 months. That's primarily because the historical cases all occurred after massive bear markets (1974, 1981, 2008).

For that reason, I'm hesitant to put much weight on this study. Comparing today to 2009 is nonsensical in many ways. The March 2009 bottom occurred after a massive and prolonged bear market. The current March 2020 bottom occurred after a sharp but short bear market. Moreover, valuations today are far from attractive.

With that being said, the Conference Board LEI has just reclaimed its 10 month moving average:

In the past, it has been better to go long stocks when the LEI is above its 10 month moving average than when the LEI is below its 10 month moving average: