With Barry claiming to have saved us all and that the stimulus and all the other spending is working, I thought it would be timely to just take a look at the Unemployment rate and how it has related to stock prices over time.
There is a very close correlation between these two interestingly enough, although it will not be what most people would expect. Just in looking back at the times since 1950 when we have been at or around 4% on the low side, and 8% on the high side, we have quite a valuable timing model that shows up. These periods of 8% or thereabouts were 1950, 58/59, 74-75, 82 and 1992. The 4% periods are 1953, 56, 69, 2000, and 2007/08. These have marked in every case a spot for a major price move. Low periods are tops not bottoms, and high periods are bottoms.
In examining this we have yet another anomaly that can be applied to this current move. It started from a very high level around 8% just like it should have. What makes it unusual is that as prices have soared, so has the unemployment rate. This has not been the case historically. Once the rallies have begun, the rate has declined. I admittedly have not been to accurate about this move off the lows. I did call for a rally in late Feb/early March, so I had that correct. However, in late May I said to get out, and that was way off.
I have continually maintained that this market is being manipulated in a way that I have never seen, and this is further proof of this. However, the bottom line here is that if we do happen to get another significant dip into high unemployment, it is a buying opporunity and not a sell. Of all things along the lines of manipulation, last night probably took the cake. I was watching Law and Order on the eve of this potential health care vote this weekend by the commies. The underlying theme in the episode was a shot at the current health care system and the implication that the drug companies are not to be trusted and need to be much more tightly regulated. It also had a public official returning a campaign contribution to a government official.
My wife used to be a pharma rep, I can tell you the one thing they do not need is more regulation. You can't take a pee as a pharma rep with out having to have some type of approval. It is amazing to me how far the socialist agenda on this is being pushed. They won't even let us watch a TV show without trying to push this! All this is inter-linked. I have maintianed all along that this rally was manipulated for political reasons, and the "mystery" buy program that showed up in the SP 500 a little while after the market was reacting negatively to the NFP report was a PPT classic. They did not have to do much more to keep the market stable yesterday.
Big picture lets hope we get a good dip to buy into, this still is a big air pocket right here.