ECRI's WLI and WLI Growth Rate Both 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 July 30, 2010

• WLI  stood at 121.8, up from the prior weeks revised (higher) reading of 121.0.  The lowest reading for WLI this year was 120.6 for the week ending July 2 and 16.
• WLI growth turned higher to minus 10.3 percent from minus 10.7 percent a week ago.  This is the first higher weekly reading for WLI growth since it stood at 13.6 on March 19, 2010.

Chart of WLI and WLI growth vs GDP Growth

Click to view full size chart

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. 

Chart of WLI vs S&P500

 Click to view full size chart

Notes: 

1. The WLI for the week ending 8/6/10 will be released on 8/13/10.
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 & quote) in my personal account and in the "Explore Portfolio" in  "Kirk Lindstrom's Investment Letter."