Over long stretches, Wall Street has demonstrated that it's a wealth-creating powerhouse. Compared to other asset classes, including gold, oil, housing, and Treasury bonds, stocks have handily outperformed on an annualized return basis over the last century.

But when the lens is narrowed to just a few months or a couple of years, the performance of the broad-market indexes becomes much tougher to forecast. In fact, the ageless Dow Jones Industrial Average (DJINDICES: ^DJI), benchmark S 500 (SNPINDEX: ^GSPC), and growth stock-powered Nasdaq Composite (NASDAQINDEX: ^IXIC) traded off bear and bull markets in successive years for the first four years of this decade.

When the stock market is volatile, it's only natural for investors to seek out clues that might signal which direction stocks will head next. While there's no such thing as a predictive indicator or metric that can, with concrete accuracy, forecast where the major stock indexes are headed, it doesn't stop investors from trying to gain an advantage.

Continue reading

Source Fool.com