- Will the Stock Market Bottom before the Economy Does?

Nobody knows the answer to that question. However, we do know what happened
during the last recession: the market kept falling until the economy's
downward momentum flattened out.

The data I am using to support this conclusion is the amount of withholding
tax the IRS takes from paychecks. This data is reported each business day, so
it is as "real time" as it gets. Withholding taxes tell us if America is
hiring or firing; cutting hours or paying overtime; giving raises or pay-cuts.

While the IRS "take" is still growing, the growth rate has turned down sharply
this year. And a falling growth rate is exactly what we had seven years ago in
2001. It wasn't until the fall of 2003 that the growth rate stopped
deteriorating, and that's when the stock market bottomed.

While it's never a good idea to count on history repeating itself, I'm not
accumulating any stock until this data turns around.

I am charting this data on my blog, where you can see it for free. Normally,
research firms charge hedge funds thousands of dollars for this data. Not only
is mine free, but it is better. My charts are much cooler.

I did this project because I wanted the data for myself. I post it on my blog
because I am using it as a test project to learn WordPress, PHP, MySQL, and
related technologies. The programmer who set up the "plenty of fish" dating
site as a practice project now makes millions from it. So, I am following his
concept of "practicing in public" with this project.

You can find my charts here:
http://www.trivisonno.com/investing/withholding-taxes-chart

Thanks for reading,
Matt





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