8.1% Unemployment Rate... Not The Peak?

Unemployment rate hit 8.1% in last Friday's Job report but no significant buying occurred. It seems like investors and traders are now at a point where they are not convinced that 8.1% unemployment rate is the peak unemployment rate for this crisis. 8.1% unemployment is the worst the US economy has experienced in 25 years (yes, 25 years of fiscal and monetary policy development did nothing to do the job they were designed to do huh?) and have shed over 4 million jobs so far. Imagine 2 million families now without income (assuming dual income families). The last time unemployment rate was higher than 8.1% was the 8.3% unemployment rate reported in 1983, which marked the high for the 1981 stock market crash. However, the stock market turned around during that crisis in mid 1982, which was way before the peak unemployment occurred. So again, stock markets usually turn around when and before peak unemployment rate... going by the market performance lately, are we safe to say that there is still a significant room to climb before we reach peak unemployment for this crisis? Maybe above 10%?

Well, like I said, this crisis is not going to end without a good and painful final capitulation and this could be the one. The Dow is still dropping steadily within its all out bear trend. There definitely isn't any indication of support or bottom yet. However, the Dow is in a grossly short term oversold condition right now and it could pullup a little, maybe even all the way up to the 7000 points level before dropping further, pretty soon. In fact, Put Call Ratio has been dropping over the past two days (see put call ratio) and could be a sign of options traders accumulating call options in anticipation of that pullup (however, there is also problems with interpreting the Put Call Ratio that way. Please read my article on Put Call Ratio).