The market is starting to suggest that we are going into – or may already be in – a recession, the Pavlovian response is that there can’t be a recession unless job creation falters. But the chart above is indicating that the jobless claims trend is starting to skew upwards despite going into the traditionally busy festive season.
If we are not yet in a primary bear market, the probabilities that one is developing are as high as they have been since the 2002 bottom. Taking it a step further, though it may not matter for the here and now, we must also consider that if we have a bear market in the offing, the possibility (rather than probability) that the S&P 500 (SPX) has put in a massive double top must be respected.
How far the market can rally and January Effect (likely to be short-lived) or not, we'll soon find out by mid-January and what's in the offing for the 1st Q.
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