“Recession” – Highest Interest Since 2009: Google Trends

When forecasting recessions and market reversals, sometimes it helps to think outside the box. Everyone knows about technical indicators and economic data. Some traders follow market breadth and sentiment, but here is one that you may not follow.

Google Trends

Google Trends tracks the relative search interest in terms or phrases over time, which can be very instructive when using the "wisdom of crowds" to your advantage. Below is a Google Trends chart of the search term "Recession" from 2004 to September 2015.

The search interest soared in January 2008 to 82 (G), which provided an excellent early exit signal before the Great Recession. The search interest declined for several months, before reaching its peak at 100 in October 2008 (F).

Since the end of the Great Recession, search interest in the term "Recession" jumped again in August 2011 to 39 (A), but quickly faded as the economic environment improved.

Search interest has now spiked again to 41 in September 2015, the highest value since the end of the Great Recession in 2009. In addition, the value of 41 reflects "partial data," which implies the value could increase if conditions worsen.

Google Trends: "Recession" - September 2015

Google Trends: "Recession" - September 2015

No indicator is perfect. As a result, it is very useful to look at a wide range of indicators that are constructed from different types of data.

Print and Kindle Versions of Brian Johnson's 2nd Book are Available on Amazon (75% 5-Star Reviews)

Exploiting Earnings Volatility: An Innovative New Approach to Evaluating, Optimizing, and Trading Option Strategies to Profit from Earnings Announcements.

Print and Kindle Versions of Brian Johnson's 1st Book are Available on Amazon (79% 5-Star Reviews)

Option Strategy Risk / Return Ratios: A Revolutionary New Approach to Optimizing, Adjusting, and Trading Any Option Income Strategy

Trader Edge Strategy E-Subscription Now Available: 20% ROR

The Trader Edge Asset Allocation Rotational (AAR) Strategy is a conservative, long-only, asset allocation strategy that rotates monthly among five large asset classes. The AAR strategy has generated annual returns of approximately 20% over the combined back and forward test period.  Please use the above link to learn more about the AAR strategy.

Brian Johnson

Copyright 2015 - Trading Insights, LLC - All Rights Reserved.

Share

About Brian Johnson

I have been an investment professional for over 30 years. I worked as a fixed income portfolio manager, personally managing over $13 billion in assets for institutional clients. I was also the President of a financial consulting and software development firm, developing artificial intelligence based forecasting and risk management systems for institutional investment managers. I am now a full-time proprietary trader in options, futures, stocks, and ETFs using both algorithmic and discretionary trading strategies. In addition to my professional investment experience, I designed and taught courses in financial derivatives for both MBA and undergraduate business programs on a part-time basis for a number of years. I have also written four books on options and derivative strategies.
This entry was posted in Market Commentary, Market Sentiment, Market Timing, Recession Forecasting Model and tagged , . Bookmark the permalink.

One Response to “Recession” – Highest Interest Since 2009: Google Trends

  1. Pingback: 14 Recent Cautionary Articles on Trader Edge | Trader Edge

Leave a Reply

Your email address will not be published. Required fields are marked *