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May 04, 2006
The Unemployment Rate and the S&P 500
In addition to Non-Farm Payrolls, Friday’s employment situation report includes the Unemployment Rate. This is also a lagging indicator for both the economy and the stock market. Notice that the S&P 500 peaked over 6 months ahead of the reversal in the Unemployment Rate (black box). Similarly, SPX bottomed well ahead of the peak in the Unemployment rate in 2003 (blue box). The most important thing here is the general direction of the Unemployment Rate and it is down (green trendline).
Posted by Arthur B. Hill at May 4, 2006 10:45 AM