Lesson 3
Coincident Indicators
Don't trade off coincident indicators — they confirm, not predict. Use them to validate your leading indicator thesis.
📊 Indicators mentioned in this lesson (click for details):
Coincident indicators tell you where the economy IS right now. They confirm, not predict.
The Major Coincident Indicators:
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Industrial Production: Real-time measure of goods-producing economy.
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Employment (Nonfarm Payrolls (PAYEMS)): The most-watched economic release. Declining payrolls = recession confirmed.
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Real Personal Income (ex-transfers): How much people are actually earning.
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Real Retail Sales: Consumer spending in real terms.
The NBER Approach:
The NBER officially dates recessions using coincident indicators. They call a recession usually 6-12 months AFTER it started.
The Trading Implication:
By the time payrolls turn negative, stocks have usually already fallen 20%+. Use leading indicators to position; use coincident indicators to confirm your thesis.
Check your understanding
Lesson Quiz
Quiz Check
What sectors outperform in each phase of the business cycle?
Quiz Check
It's late 2021. Inflation is rising, the Fed is turning hawkish, margins are peaking. How should you rotate your portfolio?