Following the attention that my recent Dow Jones/ S&P500 ideas got (you can find both at the bottom of this study) in relation to a potential market crash, I thought it would be a good time to look look at how the stock markets (S&P on this particular study) went by in times of sharp increase on the Unemployment Rate.
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Since 1970 every sharp rise on the Unemployment Rate has resulted in a sharp stock market crash with the exception of 2 times. In total we've had 8 sharp rises on the Unemployment Rate, 6 resulted into a strong market crash and 2 had stocks unaffected (even rose).
At this point I want to bring forward the fact that during the last two Bear Markets (Dotcom, Subprime), the Unemployment Rate crossed above its MA50 (see the chart that follows). That is something it has already done this time.
Does this mean that we have just initiated a new Bear Market similar to that of the Dotcom and Subprime market crashes? I am very interested in reading your opinion on the matter. Feel free to share your work and let me know in the comments section!
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Where you got the Data from S&P without Amazon? Because from my understanding AMA is only weighted around 4% and that wouldn't make a big difference. Overall the S&P holding up so well because of the big software and information giants in the index but not just AMA.
HierophantX
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@Ringding58, That graph merely subtracts the absolute value of SPX - AMZN. Doesn't really mean anything
qmarket99
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More than interesting! Never saw TA in conjunction with market/economics studies in that shape. Market says all is bright and shiny, economics says, well you know.... . Thx!
And yes, just BTW, my time frame for reasonable time ranges is 1976+ (abandon gold standard and ready for printing $).