Viewing the system equity curve and markets in general during recessions, it is clear that returns are low or even negative during these periods. Therefore monitoring economic expansions and contractions using proven tools can be very worthwhile.
One such tool is RecessionAlert. The following chart and table verify the usefulness of this approach. The market is capable of sustained falls during recessions and therefore turning points marked by breadth may not hold (see breadth page).
Note that average annual return outside recessions is 9%. Average return during recessions is significantly negative.