The Market's Best Indicator Continues To Work Perfectly

TBI ^ | 4-14-2012 | Joe Weisenthal

[blam]

The Market's Best Indicator Continues To Work Perfectly

Joe Weisenthal
April 14, 2012, 7:24 AM

This is a chart we've written a ton about over the years.

The blue line is the S&P 500. The red line is the inverse of initial jobless claims.

For over 5 years, they've moved in virtual lockstep, and they're doing it again. Lately the improvement on initial jobless claims has stalled out, and the rally in the S&P 500 has stalled out.

It alone is a good reason to think that fundamentals, not central banks, are what's driving this market.

[blam]

JEREMY SIEGEL: The Dow Is Still Going To 17,000, But There's One Thing That Could Ruin That

[MichaelCorleone]

Even so, I still think the old “don’t fight the Fed” rule is still valid.

But then again I’m not a licensed broker or investment advisor either.

[norwaypinesavage]

“Perfectly” is hardly a word to describe the correlation. “Good”, maybe, but certainly not perfect. It's clear that small perturbations in one of the indices does NOT correlate with small perturbations in the other.

[HangnJudge]

Other helpful graphs

[bert]

I see the red curve but don’t understand........ what is the inverse of jobless claims?

[mjp]

what is the inverse of jobless claims?

inverse = zero - jobless claims