Reasonably Reliable Leading Indicator I

Years ago while at the Wharton School, my research indicated that Corporate Profits adjusted for inventory build was one of several important Reasonably Reliable Leading Indicators regarding future business activity and stock market values. 

Note that in late 2013, Corporate Profits (Not Earnings Per Share) in the aggregate declined and began diverging from the S&P500.  This trend continued and even accelerated into 2014.   This is the same pattern we saw in  2007.

Several other Reasonably Reliable Leading Indicators are not negative. But this data calls for a more careful approach until we see Corporate Profits rise for two consecutive quarters. 

This data comes from the Federal Reserve and is one reason Janet Yellen is being cautious regarding the raising of interest rates. 

We won't see the next data point until 10/30/2104.