Peak Unemployment Reversal Starts?

Those of you who have been following my blog would know something I call the "Peak Unemployment Reversal". This is a phenomena where the stock market tend to turn around right at the peak unemployment rate of every crisis. Indeed, the last crisis in 2000 ended when unemployment peaked at 7.3% in 2003. That is why today's unemployment rate of 7.6% spurred such heavy buying. In fact, every higher number from now on would only result in more buying as investors speculate on a reversal. Like I mentioned before, nobody knows exactly where the peak is until it has past but speculators who love to be the first guy in, would strategically buy into each higher number. Indeed, this crisis does look like its going to end like the last one with the US government creating lots of jobs. When all that kicks in, we can be sure the stock market has already moved ahead.

So, is it going to be all the way up from now on? On the technical front, all major indices are still within their short term and intermediate term neutral channels. However, they are all right at the top of their short term channels, looking for a possible topside breakout with the strong short term bullish momentum. If the Dow does that, the next target would be the 9000 point resistance level again. However, still being in a short term neutral channel means that the Dow could still be sent down on Monday just like it did back on 29 Jan if we do not see a follow through on Monday. If this is really the peak unemployment reversal, we could expect the Dow to break the short and intermediate neutral trend to top side and continue towards the 10,000 point level before pulling back down again. That pullback would be critical in determining if a real intermediate bull trend is developing in accordance to the Dow Theory.