I did some research this Saturday morning on how the DOW performs after we hit an unemployment peak. This research assumes that November was the unemployment peak, which it certainly may not have been, we will not know for a few months. (It looks to me that 3 months will give us a pretty good idea). Friday’s data was pretty good with previous job loss numbers revised down, work week up and temp employment up.
I had written a piece a few weeks back about called “8 Months = Max time between Market Bottom and Improving Unemployment” in which I stated that 8 months was about the maximum amount of time that a bull run out of a recession can extend without evidence that unemployment was improving. Friday’s number puts us on that time table and if they prove next month to be improved yet again should continue this bull market.
So now, assuming that we have hit peak what is the performance on average from here out? I did this little table extracting by hand data from the charts:
Those are some pretty nice returns. The DOW targets on the bottom are forecasts based on the standard deviations of the data and give a range of high – low and average for the DOW from unemployment peak to three, six and one year out.
So the question is.. are we at the peak? I hope so for American workers but only time will tell.
-RLT
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