View of the US stock market (S&P 500) (2b) ISM index forecast

Reference

U.S. Stock Market Outlook (S&P 500) (1)

U.S. Stock Market Outlook (S&P 500) (2) Spotlight on the ISM Index

Reading the Current U.S. Stock Level from the ISM Index

When trying to forecast U.S. stock prices (S&P 500), one of the forecasting methods is to forecast the ISM index.

This time, we will cover that.

There are several methods and several elements, but the basics are two. This will be the base.

(1) (Non-defense capital goods excluding aircraft) Shipment-Inventory Balance

The Shipment-Inventory Balance is the year-over-year growth rate of shipments minus the year-over-year growth rate of inventories.

This concept is rarely seen in the West (inventory/shipment ratio is used, though). A long time ago, I think it was devised by Shimaka/Zaionsen? I may be misreading the name. When I asked Mr. Shimaka to explain it to me, I asked, “You seem quite confident, don’t you?” and he replied, “My success experiences make me that way,” which left a strong impression of his relaxed confidence.

As shown in the next graph,