Thesis: slightly higher SP500, before crash due to unemployment
12/9/2023
I - Issue:
Yesterday, the latest unemployment rate for the USA were released. The current rate stands at 3.7, reflecting a decrease of 0.2. The key question now is whether this is merely a test of support or a signal for a potential invalidation of the bottom structure.
R - Rule:
Since 1950, we observe numerous instances where the unemployment rate proves to be a reliable indicator for determining the macro trend of the stock markets.The formation of a bottom signals a peak for the S&P 500, and the initiation of an upward trend is generally considered the least favorable time to invest in stocks.
A - Application:
As per the latest data, the unemployment rate stands at 3.7. As evident from the charts, this marks a breached resistance that is now expected to serve as support. Additionally, there is a current rejection of the upper band of the Bull Market Support Band, but the price remains above it, indicating potential support in this range as well.
Furthermore, in accordance with the Phillips curve, there is a negative correlation between inflation and unemployment. This relationship suggests that the declining inflation, results in an rising unemployment.
C - Conclusion:
The lower unemployment rate currently appears to be a retest of the 3.7 level. It is highly likely that it will stay above this level, given the substantial support from the horizontal support and the Bull Market Support Band. Additionally, the Phillips curve provides an additional reason why unemployment may increase in the coming months. This suggests that, based on this scenario, the stock markets could be approaching a potential peak. Take this into consideration.
I - Issue:
Yesterday, the latest unemployment rate for the USA were released. The current rate stands at 3.7, reflecting a decrease of 0.2. The key question now is whether this is merely a test of support or a signal for a potential invalidation of the bottom structure.
R - Rule:
Since 1950, we observe numerous instances where the unemployment rate proves to be a reliable indicator for determining the macro trend of the stock markets.The formation of a bottom signals a peak for the S&P 500, and the initiation of an upward trend is generally considered the least favorable time to invest in stocks.
A - Application:
As per the latest data, the unemployment rate stands at 3.7. As evident from the charts, this marks a breached resistance that is now expected to serve as support. Additionally, there is a current rejection of the upper band of the Bull Market Support Band, but the price remains above it, indicating potential support in this range as well.
Furthermore, in accordance with the Phillips curve, there is a negative correlation between inflation and unemployment. This relationship suggests that the declining inflation, results in an rising unemployment.
C - Conclusion:
The lower unemployment rate currently appears to be a retest of the 3.7 level. It is highly likely that it will stay above this level, given the substantial support from the horizontal support and the Bull Market Support Band. Additionally, the Phillips curve provides an additional reason why unemployment may increase in the coming months. This suggests that, based on this scenario, the stock markets could be approaching a potential peak. Take this into consideration.