Stocks got off to a red-hot start to the week, with the Nasdaq cruising to record highs on Monday, and while the gloom-and-doom set have plenty of reason to believe it won’t last, Economic Cycle Research Institute co-founder Lakshman Achuthan doesn’t see it that way.
At least that’s what his proprietary data in this chart is telling him:
“This is a fundamentally optimistic chart,” Achuthan told CNBC’s “Trading Nation” on Monday. “It’s showing us that the cyclical fundamentals are to the upside.”
He explained that the cyclical recovery is on track, and that, at least for the next six weeks or so, should continue to keep a fire lit under equities.
“This weekly leading index objectively in an apolitical way tells us what do all these positives and negatives, the crosscurrents, add up to,” Achuthan said. “So far, so good.”
Still, he acknowledged that his index only goes so far and the long-term prospects remain iffy.
“You can still essentially be embracing cyclical risk to the upside. But I would not put it on autopilot,” he said. “We must remain vigilant and keep an eye on how the weekly leading index does in coming weeks and months to see if there’s any sign of some deceleration in the recovery.”
Watch the interview:
At last checks, stocks were mostly mixed after Monday’s strong rally, with the Dow Jones Industrial Average DJIA, -0.50% trading lower while the S&P 500 SPX, +0.12% and the tech-heavy Nasdaq Composite COMP, +0.80% both made a push into positive territory.
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