Unemployment Reaches 25-Year High Of 8.5%

More people losing their jobs which is always sad and certainly puts pressure on the stock market.  But, how well does it really correlate with stock prices?  Extremely well. 

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I’ve put a picture above of the unemployment rate inverted (green) and the S&P 500 (purple) since 2001.  You can see these are very correlated but keep in mind that stocks will turn up before unemployment peaks.  Look back at 2002/2003.  Unemployment continued getting worse until June 2003.  Yet, the stock market bottomed in the fall of 2002, about 9 months before.  Could the stock market have bottomed?  It’s possible.  I’m still not seeing the typical signs of a “real bottom”.  But, it’s an impressive enough rally to participate in.  I’ll keep updating this picture over the next several months.

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