Business Cycle Indicators (Normalized)

10 thg 10, 2024

This script aggregates and normalizes several key economic indicators to provide a comprehensive view of the business cycle and overall market conditions. By combining these indicators into a single, normalized average line, the script helps identify overarching trends and shifts in the economy, aiding in more informed trading and investment decisions.

Included Indicators:

Inverted National Financial Conditions Index (NFCI):
Symbol: FRED:NFCI
Measures financial stress in the markets. An inverted NFCI aligns higher values with positive financial conditions.

Inverted Net Percentage of Banks Tightening Lending Standards (DRTSCIS):
Symbol: FRED:DRTSCIS
Reflects changes in bank lending practices. Inverting this indicator means higher values indicate easing lending standards, which is generally positive for economic growth.

HYG Close Price (iShares High Yield Corporate Bond ETF):
Symbol: AMEX:HYG
Represents the performance of high-yield corporate bonds, providing insight into credit market conditions.

Inverted High-Yield Credit Spread (BAMLH0A0HYM2):
Symbol: FRED:BAMLH0A0HYM2
Measures the spread between high-yield bonds and risk-free securities. A narrower (inverted) spread indicates better market conditions.

Manufacturing/Non-Manufacturing New Orders Ratio:
Symbols: ECONOMICS:USMNO (Manufacturing), ECONOMICS:USNMNO (Non-Manufacturing)
Compares manufacturing to non-manufacturing new orders to gauge shifts in economic activity.

US PMI (Purchasing Managers' Index):
Symbol: ECONOMICS:USBCOI
An indicator of the economic health of the manufacturing sector.

10-Year Inflation Breakeven (T10YIE):
Symbol: FRED:T10YIE
Represents market expectations of inflation over the next ten years.

Inverted 10-Year Real Yield (DFII10):
Symbol: FRED:DFII10
Reflects the real yield on 10-year Treasury Inflation-Protected Securities (TIPS). Inverted to align higher values with positive economic sentiment.

Copper/Gold Ratio:
Symbols: CAPITALCOM:COPPER (Copper), TVC:GOLD (Gold)
Compares the prices of copper and gold, often used as a barometer for global economic activity.

Features:
Normalized Indicators: Each indicator is normalized to a 0-100 scale to facilitate direct comparison, regardless of their original units or scales.
Normalized Average Line: Calculates and plots the average of all available normalized indicators, providing a single line that represents the combined economic signals.
Customizable Display:
Show Individual Indicators: Option to display individual normalized indicators for detailed analysis.
Show Normalized Average Line: Option to display the normalized average line for a consolidated view.
Dynamic Labeling: Displays the latest value of the normalized average directly on the chart for quick reference.

How to Use:
Adding the Script:
Apply the script to a chart in TradingView using a timeframe that aligns with the frequency of the economic data (daily or weekly recommended).

Customization:
Show Normalized Average Line: Enabled by default to display the combined indicator.
Show Individual Indicators: Enable this option in the script settings to display all individual normalized indicators.

Interpretation:
Normalized Scale (0-100): Higher values generally indicate stronger economic conditions, while lower values may suggest weakening conditions.
Trend Analysis: Use the normalized average line to identify trends and potential turning points in the business cycle.

Notes:
Data Availability: Ensure you have access to all the data sources used in the script. Some data feeds may require specific TradingView subscriptions.
Indicator Limitations: Economic indicators are subject to revisions and may not reflect real-time market conditions.
No Investment Advice: This script is a tool for analysis and should not be considered as financial advice. Always conduct your own research before making investment decisions.

12 thg 10, 2024

Phát hành các Ghi chú

The normalised average was calculating differently on different charts as it did not have a defined upper and lower limit for normalising each variable. To fix this, each variable has been given a specified maximum and minimum limit to calculate the historical normalised value from.

These have been defined based on historical maximums and minimums.

Also removed adding the label to the chart as default to reduce clutter.

10 thg 11, 2024

Phát hành các Ghi chú

Added ability for user to toggle on/off individual components for the normalized average line

10 thg 11, 2024

Phát hành các Ghi chú

Chart updated

14 thg 2

Phát hành các Ghi chú

The scale for NET % OF BANKS TIGHTENING LENDING STANDARDS updated on TradingView, so had to fix the scale range in the script to ensure it still calculated the normalized average correctly