ICSA - Keep an eye on MA'sin last 20 years we had 2 "signals" and you all know how it ended. Is 50% drop on the way?
Share your thoughts in a comments.
ICSA trade ideas
if initial claims will rise ........It's a very long view, so It may take some time but i think it will happen. I do not recommend to buy equity at this point and looking for sell opportunity. We need to wait for conformation on MA's cross.
Time to sell based off initial unemployment claimsThis primary indicator just flashed a huge warning signal. Looking like its time to sell and take profits on the enormous post GFC rally. Note - keep a close watch on weekly claims in the coming weeks. We still want a little bit more confirmation of this rising before jumping to conclusions about the direction of unemployment, but I do not take this cross lightly.
Other Quick Notes...
For this signal, there ARE some false positives, most notably around 1995. 1990's signal got the recession right on the dot, but the recession was mild and it wasn't necessarily a great signal on buying or shorting the markets directly.
To get a better read on false positives combine this signal with others - look at it only post yield curve inversion. That alone will eliminate the few false positives.
Keep an eye on other unemployment data series that are faster moving and not quite as subject to revisions. Challenger job cuts, ISM employment index, and a few others can help corroborate the story here.
Other big jumps that were temporary false positives (see 2017 or 2005) typically occur due to things like hurricanes coming through. With that said, these were obvious temporary distortions, and not representative of permanent changes in the labor market.
No Sign of Recession, As Stocks Continue New Bull Expansion!Taking another look at my recession indicator, you can see that there still has not been a crossover of the orange and purple moving averages, which has historically been a precursor of recession. For those who aren't familiar with this chart, it's a recession indicator that I put together, that I like to follow as a baseline indication of recession in the economy. There are other indicators that I look at in addition to this, but this is my favorite.
The pink line graph on the chart is the S&P500, and I'm comparing that to two key moving averages on the Initial Claims chart. Each time there has been a clear crossover (with orange crossing above purple AFTER a consistent downtrend) it has corresponded to a top in the S&P before a recession. This happened in the year 2000 right before the dot com bubble, and then it happened again in 2007 at the exact top before the great recession. You can see that with the two vertical dashed red trendlines.
This indicator also works for finding the END of a recession. You can see that the first crossover with orange crossing below purple has been the signal that previous recessions have ended. You can see that with the two vertical green dashed trendlines. The crossover signaling the end of the great recession was a bit delayed, but it would have proven to be an extremely powerful entry indicator over time.
The equity markets have been breaking out to new all time highs, and (based on technical analysis that I recently published) I believe that the stock market is in a new year to multi year expansion higher.
I'm The Master of The Charts, The Professor, The Legend, The King, and I go by the name of Magic! Au revoir.
***This information is not a recommendation to buy or sell. It is to be used for educational purposes only.***
-JD-
Here is What My Personal Recession Indicator Has To SayLooking at my favorite personal recession indicator (two initial claims moving averages compared to the S&P 500) we can see that there still has not been a crossover to confirm the beginning of the next recession. With that said, the moving averages are converging, but nothing can be concluded until we see a confirmed crossover of the averages. Historically, this indicator has been very accurate, both in calling the tops before massive bear markets, and the bottoms before bull markets. A crossover will confirm that the next recession has begun.
I'm The Master of The Charts, The Professor, The Legend, The King, and I go by the name of Magic! Au revoir.
***This information is not a recommendation to buy or sell. It is to be used for educational purposes only.***
-JD-
Initial Unemployment ClaimsISCA
Expecting Unemployment to rise
Occurs 2.5 years after Fed Funds begin a rate hike cycle on average
The way the economy slows down AFTER a Fed tightening cycle tends to be fairly consistent across time.
First housing slows, then we see leading economic indicators like PMIs begin to turn lower. This is always followed by a broader profit slowdown.
It is here where the difference between a slowdown and a recession occurs - that is, whether employment takes a hit after a profits slowdown. Weakness in housing eventually has a negative impact on the labor market.
However, the Fed hiked much slower than any prior period. Initial claims could creep higher and go undetected by many.
Keep an eye on employment data in the weeks and months to come.
- RH
No Recession Signal Yet, From My Personal Indicator (ICSA/ES)Hi friends! Welcome to this update analysis on my personal recession indicator! I've shared it with you before, and now we're going to take an updated look at what is happening with the initial claims/S&P comparison. let's get right to it!
If you recall from my previous analyses on this indicator, I showed how accurately my moving averages have corresponded to previous recessions. Looking at the chart, you can see that when the orange average crossed above the purple average, it corresponded to an exact peak in the S&P 500 (in pink) and global equity markets in general. The first signal occurred in September of 2000, which was at the height of the dot com bubble. The second signal occurred in October of 2007, right near the absolute peak before the great recession. However, since then, there hasn't been a cross of the moving averages. I know a lot of people are talking about trade tensions, inverted yield curves, global debt and so forth, but this indicator isn't currently showing any sign of recession. That doesn't mean that it can't happen soon. It just isn't signaling a recession at the moment.
In fact, what it IS showing is that unemployment in the US is at all time lows, thanks to the job creation policies of President Trump. So, unless there is a sharp reversal in this trend, there is no reason to believe that a recession is immediately imminent. It will eventually come, but I doubt it will be tomorrow. ;)
#PoopLovesYou
I'm The Master of The Charts, The Professor, The Legend, The King, and I go by the name of Magic! Au revoir.
***This information is not a recommendation to buy or sell. It is to be used for educational purposes only.***
-JD-
ICSA Initial Claims plotted against ES1 as recession predictorThis is not an original idea. I applied a fibonacci-level pitchfan to the ICSA chart and found that the ES1 adheres in some interesting ways to the ICSA fan levels. Also, I added a trendline along the ICSA's peaks and noticed that the ES1 chart is currently bouncing between the ICSA's upper trendline and it's upper .382 fib level.
I'm not throwing an analysis here, just some observations. Maybe someone more savvy will read more in these tea leaves.
How A Debt/Currency Crisis Will Unfold! Don't Miss! (ICSA/ES)Whether you realize it or not, we are on the cusp of the greatest financial crisis the modern world has ever known — and it all revolves around debt. Practically every nation in the world is in debt, but it's far worse than most people realize. You know that $22 trillion dollar US debt number that everyone always talks about? Well, that's only the government's debt. The total debt of the US can be seen in the "unfunded liabilities" numbers. That takes debts like student loans, personal debts, mortgage debts, credit card debts, social security liability, and medicare liability into consideration. When we factor all of those debts, and add it to the $22 trillion dollar number that everyone always talks about, we get a more realistic look at what the US debt situation is actually like. According to the Federal Reserve's official numbers, the US unfunded liabilities are a staggering $125 trillion dollars. To put that into perspective, the value of all US assets (our real estate, buildings, technology, intellectual property, business giants, transportation systems, infrastructure, etc.) totals about $155.8 trillion. In other words, the US's unfunded liabilities are over 80% of the entire value of our national assets. And that's ONLY the US.
Practically every other developed country in the world is in debt. In terms of national debts alone, the US has $22 trillion, China $9.5 trillion, Japan $12 trillion, Germany $2.2 trillion, UK 3.5 trillion, India $2.8 trillion, France $3 trillion, Italy $3 trillion, Brazil $2 trillion, Canada $1.8 trillion — the list goes on and on. And let me remind you, those are only GOVERNMENT debts. Not the unfunded liabilities of those respective countries.
People, we have a major global debt crisis right in front of our faces, and it's getting worse, and worse, by the day. If something isn't done to change the acquisition of debt worldwide, we will eventually see a financial meltdown like the world has never known.
In my view, here is how it will start. Since Federal Reserve banks set interest rates worldwide, they have been able to enjoy the economic benefits of growing a debt-based economy, with the LUXURY of new debt being subjected to low interest rates. Meaning, people and businesses acquire debt, at low rates that the Fed has created. However, I believe that Reserve Banks will eventually lose control of interest rates, and that is where the collapse will begin.
You may be wondering how Reserve Banks could lose control of rates. The answer is demand. Since interest rates and bond prices have an inverse relationship, I believe that bond prices will eventually crater, due to a sudden collapse in demand for debt. In other words, owning debt is becoming increasingly risky, as debt continues to climb, while NOBODY PAYS THE DEBTS!! Who is going to want to own debt, when practically NOBODY is paying it? Eventually, I think demand for debt will collapse, and therefore bond prices will collapse. When bond prices collapse, interest rates will skyrocket, regardless of what federal reserve banks want to "set" them to.
In this scenario, tens of trillions in global debt will suddenly be exposed to inflated interest rates, which will cause these debt figures to swell exponentially. The debt could rapidly grow into the hundreds of trillions, or even quadrillions of dollars. This is how I believe we could see a global currency crisis, and potentially war, as a result.
Now, there are things that Central Banks can do to prolong the inevitable. They could print more money (which they will.) They could suppress interest rates (which they are.) They could even take rates negative, like Japan did. That means that central banks could start charging depositors a fee for their deposits. The intention is to incentivise depositors to keep their money out of the banks, and circulate through the economy. It's an inadvertent form of economic stimulus, and extremely bullish for cryptocurrencies. Either way, the outlook is very grim, in terms of global debt.
So, when can we expect this crisis to erupt? Well, I think it will be born out of the next recession. And I believe that the next recession is most likely less than 18 months away. We've seen an inversion of the yield curve. We've seen the Fed reverse course on rates, showing us all that they are too scared to hike 0.25%, for fear of collapsing the market, causing a recession, and a debt crisis as a result.
I fully expect to see the US Federal Reserve cut rates again, AND return to QE. They will pump the economy with worthless money hot off of their presses, and they will probably be successful at temporarily preventing a complete collapse. But folks, this system is BOUND TO FALL, and eventually, it will.
So, the chart in front of you is something that I've shared in the past. It's my personal recession indicator. I know that
other people follow the initial claims movement as a recession signal, but I have tweaked it to perfection. The blue line is the Initial Jobless Claims. The Pink Line is the S&P 500. As you can see, when the 25 MA (in orange) crosses above the 100 MA (in green) it has corresponded to an absolute peak in the market, and a subsequent recession. In October of 2000, the signal triggered right at the top of the dot com bubble. Then, in October of 2007, the signal triggered again right at the market high before the Great Recession. Now, the stock market is nearly three times higher than it was then, all thanks to the trillions of dollars of worthless money created by the Fed, during QE1, QE2, and QE3. All I'm waiting for, is the next signal. When that orange 25 period moving averages spikes above the green 100 period moving average, the recession will be just getting started.
As a side note, US unemployment is at record lows, and it tends to bottom out before a recession. I believe that the US labor market is reaching a point of saturation, and that will likely cause growth to stagnate, which will contribute to the emergence of a recession.
#PoopLovesYou
I'm The Master of The Charts, The Professor, The Legend, The King, and I go by the name of Magic! Au revoir.
***This information is not a recommendation to buy or sell. It is to be used for educational purposes only.***
-JD-
How A Rise In Initial Jobless Claims Could Trigger A RecessionThis chart aims to delve into the probability of the next U.S. led recession beginning this year. Lets get started.
This chart takes the S&P 500 Index (America's main market index) in yellow and compares it to the Initial Jobless Claims Data (direct from the Federal Reserve) in grey. We also take two very standard moving averages of the Initial Jobless Claims data set which are the 50 week moving average and 100 week moving average. What we can see is that as the 50 week moving average crosses over and above the 100 week moving average (Indicated by the vertical red line) this confirms a trend of rising initial jobless claims has begun and a recession is imminent. This moving average crossover preceded the 2000 recession and the 2008 recession and it is getting close to crossing over again now, hence the title of this post "How A Rise In Initial Jobless Claims Could Trigger A Recession".
Along With this data I have also shown a common pattern that the S&P 500 Index displays as it is topping out. This is the infamous volatile double top formation which occurred in 2000, 2008 and is happening again now as we speak on a massive scale. Add to that my related article linked below that outlines how the 3 month treasury yield is predicting the next recession and you can begin to see multiple factors lining up all pointing to the same recessionary outcome.
Combining all of this information we determine it is likely that the next U.S. led global recession could begin as soon as October this year (2019). A recession of course means two consecutive quarters of negative GDP, so if the first negative quarter is Q4 2019 and the second negative quarter is Q1 2020 then the data required to officially confirm and announce a recession will not be available to the public until the end of Q2 2020. Meaning if the next recession starts in October of 2019 we will not officially know about it until mid 2020.
Prediction: The next U.S. led global recession could start as soon as October 2019 and wont be officially acknowledged and announced until mid 2020.
This is not financial advice, just general economic analysis.
Don't Miss This POWERFUL Recession Analysis! (ICSA/ES)This is one of the most fascinating charts that I have ever created. It is an incredibly accurate recession indicator, and it should not be ignored. Let's take a look.
This chart is a comparison of the initial jobless claims in the US, to the E-Mini S&P500 futures contract. Unemployment claims are in blue and the S&P500 is in pink. You can see that there are two moving averages that are following the unemployment chart. They are the 25 MA (in orange) and the 100 MA (in green.) FYI, I began with the 50 and 200 MAs, but I cut them in half to shorten the crossover time. Now that you all know what each line represents, let's begin the analysis.
Looking at the chart, we can see that each time a bullish crossover occurred (red vertical trendlines) between the 25 MA and the 100 MA unemployment skyrocketed, and a recession kicked off at the exact same time. The first bullish crossover on this chart occurred in October of 2000. From there, unemployment ripped higher, and the S&P500 collapsed as a result of the dot com bubble. Then, we saw another bullish crossover of the 25 and 100 week moving averages for the unemployment chart, and unemployment skyrocketed again. That occurred at the exact top, just before the stock market melted for the 2008 recession. Now, here we are today, with unemployment at historically low levels. You can see that the 25 MA is curling up toward the 100 like it wants to cross over. It hasn't crossed yet, but we could see a bullish unemployment cross in the near future. That means that we may soon see a deadly accurate indicator, that the market is about to melt to the downside, just as it has each time this has happened in the past several decades.
I have published countless analyses showing how the current market condition is technically similar to 2008. The technicals are there, and the fundamentals are far more grim than anything we have ever seen in the history of modern day finance. Sure there is a bunch of fluffy economic data that gets touted around on mainstream media, but under the hood, is the largest debt bomb the world has ever known. The US unfunded liability debt is over $123 Trillion, yet all of our assets as a nation are only valued at $138 Trillion. The Fed has interest rates at a tiny 2.5%, which is less than half of the 5.25% that it was before the great recession. So, their ability to rescue the economy by cutting interest rates is severely diminished. Additionally, they have trillions of dollars on their balance sheets. So, their ability to buy assets and stimulate with QE4 is also questionable. Let me put it to you like this. There is only ONE thing that is currently preventing the greatest financial collapse in the history of the world, and that is the fact that we still have control of interest rates. As soon as the Fed and other central banks lose control of rates, these multi-trillion dollar debts will balloon out of proportion, currencies will collapse, and we will have a complete meltdown of global financial markets. Did I mention that is part of the reason that I love Bitcoin? This next recession will be epic, and it will probably always be remembered as The Global Debt Crisis. So, yes, I believe that this market is on very thin ice, and I shall be underneath it when it breaks.
I'm the master of the charts, the professor, the legend, the king, and I go by the name of Magic! Au revoir.
***This information is not a recommendation to buy or sell. It is to be used for educational purposes only.***
-JD-
Initial Claims vs. SPX - Close to a CrossCross = very negative, and typically occurs during a fed rate cutting cycle. These often top-tick markets, and this has been a very reliable indicator across all the bull and bear markets for quite some time.
Note - I use ICSA because despite it being noisy, it's actually a cleaner data series when you just smooth it with a moving average (I use EMA). It's not subject to as much potential bias or data issues as some of the other unemployment metrics are.
Initial Claims UpdateToday's read (not accounted for in this chart) is starting to make this a bit worrying. ICSA rising again week over week, threatening to break momentum. ICSA is a noisy indicator, but if you simply add smoothing with a moving average calculation, it becomes a better version of the unemployment rate. I say it's better because it's not subject to data issues such as workforce participation rate or other such issues that may skew the data a bit. Beyond that, ICSA leads the unrate from a data perspective, so it's a bit more of an advanced indicator.
For this indicator, I like to use the 52 week (1 year) EMA and the 26 week (1/2 year) EMA to smooth things out. This HAS crossed in the past 10 years temporarily during some big unemployment swings from hurricanes. So it's important to understand those as just temporary false signals, and not anything real going on with the economy. Right now however, we clearly have no hurricanes going on, and we're getting very close to a cross, which is a pretty damn good sell signal.
Initial Claims updateNo MA cross included here, just an update on current Initial claims direction. We're still ticking upward more, haven't yet received confirmation, but starting to look like we'll get some momentum in the unemployment rate. Once that gets going, it's game over for the economy. We're getting more and more updates of corporate layoffs recently, but wait on data to confirm.
FWIW, initial claims is a great series to watch, and is better than the straight unemployment rate because it's...
Higher frequency
Not affected by the volume of people out of the workforce
Not affected by average hourly work week differences from month to month
According to jobless claims, recession unlikely b4 2019(re-post)I posted this post in mid-2017. I am reposting as the debate has risen recently whether a recession is near or not. it might be handy in 2019.
Original Post:
Jobless claims figures have been a reliable indicator of recessions. By examining a historical chart that goes back to 1960s we see a similar pattern in the behavior of claims and recessions.
Every single recession the U.S. encountered in the underlying period was preceded by a rise in jobless claims. The chart above draws the quarterly jobless claims. The shaded areas are the periods of recession.
The quarters that the U.S. officially got into recession in all cases were preceded by multiple quarters of rising jobless claims, and in most cases these rises are consecutive.
For example, ahead of the 2008 great recession, jobless claims increased for three consecutive quarters.
-2001 recession was preceded by 5 quarters of rising claims( latest 3 were consecutive)
-1990-1991 recession was preceded by 8 quarters of rising claims (latest 3 were consecutive)
-The earlier recessions have also had the same pattern.
Before any recession, we had a minimum of three quarters of rising jobless claims and in one case we had 8 quarters.
Having that in mind, it is highly unlikely that the U.S. will encounter an official recession soon(before 2019).
----------------------------------
2019 Update:
We had the jobless claims rise in the past quarter, however, it remain low.
In my opinion, we need at least two more quarters of jobless claims rising to start "seriously" considering a recession in 2020. Let's see how things develop the first 6 months of 2019.
Best
Technician
Inverted Initial unemployment claims.Watch the cross here. Note the extremely close match to the overall stock market, and how this LEADS recessions. This data has a few small false signals going back to the 60's, but it has properly led every recession regardless of that fact. If you combine this signal with something simple like yield curve inversion, you would get one of the easiest and best market timing indicators out there. Pretty simple really.
Getting close to the time to get out of markets here. We have yet to see confirmation, but initial unemployment claims are looking worrisome here, and we haven't even processed the big layoffs from some of the automotive manufacturers. There are some false breakouts or false concerns in here, so that's why you may want to wait until more sustained uptrend occurs, but when combined with other economic issues, this is definitely something that's likely telling us where markets are going in the near future.
Unemployment / Initial claims momentum for recession watchingUnemployment data is clearly one of if not the most important data sets when it comes to predicting a recession. With unemployment at very long term lows, when does this break, and what happens when it does? For me, I watch exponential moving average crossovers in unemployment data. Initial claims works if you smooth it out (it's a high frequency data series).
The key takeaway with unemployment is that it tends to trend strongly. Once a direction is established, it will usually keep heading in that direction. Right now, the shorter-term moving average here is curling upward rather fast as we've heard about a series of big layoffs (GM) and potential weakness in the economy. Is this the start of something bigger? We'll have to wait and see of course, I watch for a cross and then sustained upward movement. When an economy gets tight due to inflation, higher interest rates, higher wage costs, and lower demand for big ticket items (as seen in autos, homes, etc) companies eventually are forced to lay people off. As you can probably see, this easily becomes a feedback loop in the economy. When laying off people reaches a high enough point, that affects the demand portion of the consumer economy, which then starts to affect companies bottom and top lines. This then forces more layoffs, defaulting in the credit cycle, etc etc.
Basically, once unemployment picks up momentum, it almost always leads to a recession.
According to jobless claims, recession is unlikely before 2019Jobless claims indicator has been a reliable indicator of recessions. By examining a historical chart that goes back to 1960s we see a similar pattern in the behavior of claims and recessions.
Every single recession the U.S. encountered in the underlying period was preceded by a rise in jobless claims. The chart above draws the quarterly jobless claims. The shaded areas are the periods of recession.
The quarters that the U.S. officially got into recession in all cases were preceded by multiple quarters of rising jobless claims, and in most cases these rises are consecutive.
For example, ahead of the 2008 great recession, jobless claims increased for three consecutive quarters.
2001 recession was preceded by 5 quarters of rising claims( latest 3 were consecutive)
1990-1991 recession was preceded by 8 quarters of rising claims (latest 3 were consecutive)
the earlier recession have also had the same pattern.
Before any recession, we had a minimum of three quarters of rising jobless claims and in one case we had 8 quarters.
Having that in mind, it is highly unlikely that the U.S. will encounter an official recession soon(before 2019).
Best
Technician
