Well, today we got the horrid news that the unemployment rate spiked up to 8.1% from 7.6% previously. In fact, over 650,000 jobs were lost last month.
Here’s the thing about fundamental trends…they don’t change quickly. When the “fundamental ball” is rolling in the right direction, it goes for a long time. However, unfortunately the inverse is true also: When the “fundamental ball” is rolling in the wrong direction, it’s not quickly turned around either.
So what does a higher unemployment rate and skyrocketing job losses mean? It means that you probably won’t see a bottom in the stock market until this bleeding stops.
As my readers know, I have a saying: Economies turn around like ships and not like speedboats. Therefore, knowing this, instead of trying to “pick the bottom” in the stock market, why not turn to what’s working now and not what “may” work years from now (because that’s how long it may take for many people stock positions to come back above water).
Even though stocks started off “up” this morning , do you really think that will continue as more corporations layoff workers and these “workers” which are also “consumers” who will spend less and less, and even default on their bills? I don’t think so. In fact, the market is correcting that “temporary upturn” even now.
There’s a lot of “fundamental trouble” staring the stock market in the face: 1 in 8 homes are in foreclosure and more than 103,000 individuals and businesses filed for bankruptcy last month.
Until this fundamental trend is stopped in its tracks, I don’t see a turn around in stocks. When will this turnaround come? I look to the “weekly” Initial Jobless Claims numbers. Once we see a parabolic spike upward AND a notable reversal, then we will probably be at the BEGINNING stages of the reversal of the economic downturn and bear market in stocks.
See the chart below and you can get a visual of what I’m talking about. Just before 2001, the last spike and reversal came about.
Initial Jobless Claims Spiked and Reversed Last in Late 2000
When you see the chart, you can see why I say this will be the “beginning” of a recovery once that spike and reversal happens. You’ll note that it still drags on for the next year.
This is why I cannot emphasize enough to capitalize on something that is PROSPERING NOW as opposed to waiting until all of the employment and economic situations finally works itself out.
This is what you should do in order to protect your portfolio now!
What’s bottomed now and likely to recover first? There are many Japanese yen pairs in the forex market that appear to have bottomed in October and have based sideways since then. They appear to be poised for a breakout higher in the coming weeks to months ahead. However, they are NOT breaking to fresh lows like most other financial instruments all over the world.
In fact, USD/JPY has recently broken out into new highs. It’s one of the few financial instruments in the world to do this in this present economic environment. So it’s always noteworthy to see something breaking out to the upside when most of the financial assets in the world are still breaking lower to the downside and will probably continue to do so for quite some time.
Therefore, you should check out these yen crosses: USD/JPY, EUR/JPY, AUD/JPY, CAD/JPY, etc. in the forex market.
Get a demo here so you can see what I’m talking about. There you will have access to FREE, REAL TIME quotes and charts so you can get a feel for what I’m speaking about for yourself.
THEN…get an education in this market so you will feel comfortable investing in these currency pairs that have stabilized and even broken higher recently. After all, you need positions in your portfolio that are going up NOW in order to combat a slumping 401k, IRA or stock brokerage account. Time is of the essence. Don’t be paralyzed by fear and do nothing. Take charge of your future. Don’t wait on the government!
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Sean Hyman
Head Course Instructor
http://www.mywealth.com