With that said, the 'crazy' market sell off may not signal a recession ahead, but the Economic Activity Composite (EAC) does.
Chart 1 NYSE Intermediate Term Volume Momentum Oscillator
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Headline: Crazy market selloff doesn’t signal a recession
The almost 10% decline in U.S. stocks so far this year—clocking in at the second-worst start to the year since 1929—has amped up concern among some investors about the R word: recession.
As Goldman Sachs highlighted in a research note Thursday, large selloffs do not necessarily signal recessions, technically defined as two consecutive quarters of negative economic growth as measured by GDP. Goldman cited the 19% decline in the S&P 500 between July and October of 2011 -- which did not coincide with or precede a recession -- as an example.
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