We are not in a recessionary bear market yet....This analysis overlays US Recessions over CBOE:SPX on the top pane.
Bottom pane is a technique shared by famous trader , Larry William - recently presented at a NAAIM Conference. The technique looks at US job market as % of population. You can find more on Sentimentrader.
Larger declines in stock market are usually accompanied by a recession. There is clearly a softening of the labor market but hanging above the recession territory.
Unless we dip into a recession and Oct 2022 lows on SPX holds - we are not in a recessionary bear market.
EMRATIO trade ideas
US Employment Figures: July 2020The markets reacted positively from the news that employment data saw a bounce, but we need to be honest with ourselves here. Several states 'reopened for business' through this period; but the participation rate is the lowest it has been since the end of WW2. Just think about that for a minute. The lowest employment participation since soldiers returned to an economy that did not need them.
A little over 4 weeks ago, NBER officially declared the US was in a recessionary period; and included the following in their statement:
"...it concluded that the unprecedented magnitude of the decline in employment and production, and its broad reach across the entire economy, warrants the designation of this episode as a recession, even if it turns out to be briefer than earlier contractions."
This is from a committee that took almost a year to decide if the GFC was a recession or not. Rome is burning, and everyone is looking at the pretty pretty flames...
Civilian Employment to Population Ratio -great toolThe head and shoulders formation is a classic sell setup that traders are familiar with. A close below the neck line is a sell signal for traders. Well, as you can see this was a signal of an economic downturn and it predicted it in the summer before the market crash in the fall. This would have alerted people to prepare for the impending doom and for traders to sell short like Dr. Michael Burry of Scion Capital did with his hedge fund. The market low was set in the spring but the employment low occurred later. The previous lows set in 1961 and 1975 gave an angled level of support at which the recent 2011 low was set. We are now at civilian employment to population ratio levels of 1985! Let that sink in, 1985. This was a severe economic crash that we have yet to recover from. This data is from 1948 until 2017. I wish it started with data before the crash of 1929. What pattern was given then to signal a crash? I think this is a chart to keep an eye on every now and again.