Thursday, John Hussman , the president of the Hussman Investment Trust who called the 2000 and 2008 stock market crashes, added two more indicators to the mix that show "economic conditions hovering at the threshold of recession."
Hussman points out several red flags indicating potential market instability: inflated valuations, noticeable divergences across different stock sectors, and a disproportionate bullish sentiment. A particular concern he highlights is the increasing number of stocks hitting new 52-week lows despite overall market indices reaching new heights.
A composite index measuring manufacturing output against business demand. When orders for goods outpace manufacturing output, it's a sign of a healthy economy.
At the moment, the ratio is floating right around zero. The only times it has dipped into negative territory have been during the last eight recessions.
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