The best market indicators are ones that derive from things that are counted vs. derived from questions that are asked such as surveys. The following chart was produced by the St. Louis Federal Reserve and published on the Business Insider’s Money Game page. This is what the author had to say . . .“The S&P 500 (red) and initial claims flipped over (blue) have moved together very nicely for over 5 years now. This is the nicest signal we have that the market continues to operate on the fundamentals of the economy, and most of everything else we have is noise.” The inference is that the market has risen and looks to continue to rise as long as the Initial Unemployment Claims continue to improve –albeit slowly. To be sure – at some point they will level off once employment picks up to a higher rate of growth but that would be a good thing –eh? Jeb Terry, Sr. Aug 5, 2012
Note that the S&P 500 is measured on the left axis. Initial unemployment claims are on the right axis. Courtesy of Business Insider.
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