CHART OF THE DAY: Watch This Chart To See If Stocks Are Going To Tank

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This morning we noted how if the economy really does start to soften, you shouldn’t count on QE to save you.

QE didn’t cause the market to rally from September – November, and it didn’t save the stock market in Japan.

You should watch the US Economic Surprise Index, which basically measures whether the data is beating expectations or not, which is really the key question to driving stocks higher.

Here’s an update from Nomura, and as you can see it’s starting to crest. The index is still positive, so on net we’re still surprising, but… if it keeps rolling over, then watch out. The economy will follow.

chart of the day, us economic surpirse index, dec 2010

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