- Articles -2012 - Dow Jones Economic Sentiment Indicator, ESI, Update
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Economic Sentiment Indicator, ESI, Moves Higher
Dow Jones Economic Sentiment Indicator
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September 3, 2012:  According to Gren Manuel1, On Friday, August 31, 2012, the August reading for the Dow Jones Economic Sentiment Indicator, ESI, rose for the first time since March.  Manuel reports the ESI is "mildly upbeat on the US Economy" as ESI rose from 42.8 in July to 45.8 in August. 
"But the indicator suggested any move would be too modest to make any substantial impact on the course of the presidential election or deflect those in the Federal Reserve who believe it needs to administer additional economic stimulus.

The indicator for August was 45.8 from the 42.8 of July. It is the indicator's first rise since March though it remains well below the levels set at the start of this year when it came close to 50 for the first time since the credit crisis began in 2007.”

Graph of Dow Jones Economic Sentiment Indicator vs S&P500

The ESI is determined by a proprietary, in-depth sentiment analysis of national news coverage across 15 daily newspapers. 
"The Dow Jones Economic Sentiment Indicator aims to predict the health of the U.S. economy by analyzing the coverage of 15 major daily newspapers in the U.S. Using a proprietary algorithm and derived data technology, the ESI examines newspaper articles for positive and negative sentiment about the economy. The indicator is calculated through Dow Jones Insight, a media tracking and analysis tool. The technology used for the ESI also powers Dow Jones Lexicon, a proprietary dictionary that allows traders and analysts to determine sentiment, frequency and other relevant complex patterns within news to develop predictive trading strategies."

"The ESI’s back-testing to 1990 shows that indicator clearly highlighted the risk that the U.S. economy was sliding into recession in 2001 and 2008 and suggests the indicator can help predict economic turning points as much as seven months in advance of other indicators."

ESI is reported on a scale of 0 to 100 with higher numbers represent increasingly positive sentiment.

Make sure you read my article: Winning On The Zigs, Losing On The Zags  <<==

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Note 1:  NASDAQ Article: Dow Jones Economic Sentiment Indicator Mildly Upbeat on US Economy
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