Recession Indicator Triggered on Unemployment Up Tick

Recession Indicator Triggered on Unemployment Up Tick

Recession Indicator Triggered on Unemployment Up Tick

$DIA, $SPY, $QQQ, $VXX

September’s jobs report contained a sign that investors should be on alert for Recession in the US, and that means a stock market correction

1 of the Top 3 necessary Recession indicators is when the unemployment rate breaches its 12-Month MA.

September NFPs (non-farm payrolls) report showed that the unemployment rate in the US ticked up to 5%, while the 12-Month MA held steady at 4.9%.

Over the past year, the trend in the unemployment rate has turned from improving to deteriorating.

“The bad news is it’s going to go above its 12-Month MA with a high likelihood in September,” something that puts us “on alert for a recession, bond guru Jeffery  Gundlach said Friday

The good news, however, is that indicator has given false positives before, most recently near the end of Y 2010, and there is another metric that has much more predictive power, according to Mr. Gundlach.

We know we’re in big trouble once the Quarterly unemployment rate breaches its 3-year MA, something that does no look to be in the cards yet.

Friday, the major US stock market indexes finished at: DJIA -28.01 at 18240.49, NAS Comp -14.45 at 5292.40, S&P 500 -7.03 at 2153.74

Volume: Trade was heavy with about 929-M/shares exchanged on the NYSE

  • Russell 2000: +9.9% YTD
  • NAS Comp +6.2% YTD
  • S&P 500: +5.7% YTD
  • DJIA +4.9% YTD
HeffX-LTN Analysis for DIA: Overall Short Intermediate Long
Neutral (-0.16) Neutral (-0.06) Bearish (-0.29) Neutral (-0.14)
HeffX-LTN Analysis for SPY: Overall Short Intermediate Long
Bearish (-0.25) Bearish (-0.45) Bearish (-0.33) Neutral (0.03)
HeffX-LTN Analysis for QQQ: Overall Short Intermediate Long
Neutral (0.19) Neutral (-0.09) Bullish (0.33) Bullish (0.33)
HeffX-LTN Analysis for VXX: Overall Short Intermediate Long
Bearish (-0.32) Bearish (-0.38) Bearish (-0.33) Bearish (-0.25)

Have a terrific weekend.

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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