ECRI WLI Update - Weekly Leading Index Data

ECRI's WLI Down and WLI Growth Rate Up

The Economic Cycle Research Institute, ECRI - a New York-based independent forecasting group, released their latest readings for their proprietary Weekly Leading Index (WLI) this morning. (More about ECRI)

For the week ending August 13, 2010

• WLI  stood at 120.8, down from the prior week's revised (lower) reading of 122.0.  The lowest reading for WLI this year was 120.4 for the week ending July 16.
• WLI growth moved higher for the third week in a row to minus 10.0 percent from minus 10.2 percent a week ago.  

Chart of WLI and WLI growth vs GDP Growth

Click to view full size chart

Commenting on the numbers, ECRI's managing director Lakshman Achuthan said,

"With the WLI staying essentially flat for the last six weeks, following a nine-week plunge, it is premature to predict a new recession, though risks remain." 

Since ECRI releases their WLI numbers for the prior week and the stock market is known in real time, you can often get a clue for next week's WLI from the weekly change in the stock market.

Charts:

• DJIA 
• S&P500 
• NASDAQ 
• NYSE Composite 
• QQQQ
• Russell 2000 
• Russell 3000 
• Wilshire 5000 -

Notes: 

1. The WLI for the week ending 8/20/10 will be released on 8/27/10.
2. Occasionally the WLI level and growth rate can move in different directions, because the latter is derived from a four-week moving average.

Before you claim understanding of ECRI's WLI, make sure you read the article  "ECRI Weekly Leading Indicators Widely Misunderstood."

"Bottom line, neither the “experts” predicting that the sky is falling based on the WLI, nor the other “experts” indulging in misinformed WLI-bashing in an effort to discredit the super-bears, have a real clue to what the WLI is all about...  A slowdown in U.S. economic growth is imminent, but a new recession is not." 

Disclosure:  I am long SPY (charts and quote) in my personal account and in the "Explore Portfolio" in  "Kirk Lindstrom's Investment Letter."