The Correlation Between Consumer Sentiment and the S&P 500

The University of Michigan reported a recent plunge in its Consumer Sentiment Index. Contrary to what you might logically expect, this is actually a positive for the stock market.

Analyst Mark Hulbert notes that the American consumer is a fairly reliable contrarian stock market indicator, and calculated the data in the chart below. More often than not, large declines in consumer confidence have been followed by above-average stock market returns.

?As Warren Buffett says - it is wise for investors to be "fearful when others are greedy, and greedy when others are fearful." 

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source http://www.expertclick.com/NewsRelease/The-Correlation-Between-Consumer-Sentiment-and-the-SP-500,2021260514.aspx

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