Profile image
Story Views

Now:
Last Hour:
Last 24 Hours:
Total:

This Fantastic News Is a Terrible Sign for the Stock Market

Friday, April 22, 2016 0:35
% of readers think this story is Fact. Add your two cents.

(Before It's News)

Great news!
Fewer people applied for unemployment last week than at any time since 1973
This tells us that the U.S. economy is healthier than most people expect.
Specifically, “initial jobless claims” hit a 42-year low – at 247,000 people. Basically, fewer people need jobs.
That’s good, right?
Now for the bad news…
The stock market typically performs terribly going forward after “great news” like this – losing money at a double-digit rate 12 months later.
Let me explain…
It may surprise you to hear it, but the stock market typically performs its best after BAD news on the employment front…
When the initial-jobless-claims number is high (which means a lot of people are out of work), stocks actually perform incredibly well going forward…
We quickly ran some numbers on this, and the initial results are amazing… When a lot of people need work – say 500,000 or more – stocks dramatically outperform over the following 12 months.
Going back to 1973, whenever initial jobless claims were 500,000 or more, stocks soared an incredible 24% over the next year. (We looked at a four-week average of jobless claims to smooth out the weekly jobless numbers.)
All of those bad extremes in jobless claims happened during recessions. (They happened in 1975, 1980, 1982, 1991, and 2009.)
Today, we are in the opposite situation… Fewer people are filing for unemployment than ever – just 247,000 last week.
Data going back to 1973 show it’s rare for this number to fall anywhere near this low. As I mentioned, this is actually bad news for the stock market going forward…
When the jobless-claims number is below 280,000, stocks lose money at a rate of 13% a year. (Again, we looked at when the four-week average was below 280,000, not just the weekly number.)
Don’t get hung up on the specific return figures. Pay attention to the overall point…
The U.S. economy, it appears, is healthier than previously thought, based on the latest jobless numbers. And history says that’s not a great thing for stocks.
This is one piece of evidence that could mean the end of the great boom in stock prices might be closer than many people think.
Good investing,
Steve
Editor’s note: Fortunately, if this great boom in stock prices has finally run its course… you can be completely prepared to protect yourself – and even prosper – as the market heads lower. We’ve created a sophisticated Bear Market Trading Program that features some of the best trading strategies to take advantage of the opportunities for double- and triple-digit gains that will be possible in the months ahead. Click here to learn more.


Source: http://www.stansberryresearch.com/dailywealth/3254/this-fantastic-news-is-a-terrible-sign-for-the-stock-market

Report abuse

Comments

Your Comments
Question   Razz  Sad   Evil  Exclaim  Smile  Redface  Biggrin  Surprised  Eek   Confused   Cool  LOL   Mad   Twisted  Rolleyes   Wink  Idea  Arrow  Neutral  Cry   Mr. Green

Top Stories
Recent Stories
 

Featured

 

Top Global

 

Top Alternative

 

Register

Newsletter

Email this story
Email this story

If you really want to ban this commenter, please write down the reason:

If you really want to disable all recommended stories, click on OK button. After that, you will be redirect to your options page.