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TimingIndicator.com This last Friday the Federal Reserve
reported the unemployment rate rose to 5% for December and revised earlier
data. That brings the last 3 months average to 4.83% which is 4/10th above
the low 3- month average of 4.43%. From the Special Report on Rising
Unemployment you'll see that on the 10 prior occasions that this happened
since 1948 there were 10
recessions accompanied by 8 bear markets. Usually this signal lags the
actual start of recessions which will not be determined "officially" by the
National Bureau Economic Research (NBER) until later this year. A recession
is no longer approaching...it is here now. That means the highs of last
October were probably the start of a bear market which will also not become
"official" according to my definition until the Dow Jones Industrials and
the Standard & Poors 500 Index EACH drop -16%. Another 900 point decline on
the Dow Jones and 100 points on the S&P will meet the definition.
Incidentally, Wall Street will not acknowledge it until it drops -20%. After
that we will be watching for the signs of the bear market ending,
specifically for capitulation which if it occurs will mark the end and the
next bull market will follow. We'll obviously keep you updated in future
Letters but wanted you to be the first to
know about the recession being here now.
Jack Schannep
The
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