Market Term - Rule of Eighteen

This rule applies to the DOW Jones Industrial average and so it can be skewed a little bit for the emerging markets. Also, the fact to be taken into consideration is that DOW just has old economy stocks and no tech stocks.

Basically, this rule states that sum of Inflation and P/E of the Index determines how the stock market should move. If its greater than 18, then the stock market moves down, if its less than 18, the stock market will move up.