Futures Drop on Unemployment Data

Posted: September 5, 2008 at 9:09 am by Chuck

Our predictions of rising unemployment have been on target since the end of 2007. Our earlier prediction for 6.4% unemployment rate by the end of this year remains on track to being met. Additionally, the rate of rise is increasing which may require us to revise our estimates for unemployment upwards for 2009.

We will be watching the reaction in the markets for an eventual retest of the July lows on the S&P 500 index. Will those lows be retested today? Or will the market float downwards over the next few days and weeks? Can’t say at this moment, but one thing we have remained very clear about for over a year now is that the markets will continue to go lower over time.

We remain solidly within a bear market and shall be for a considerable time to come in our estimation. Bear market rallies will come and go, but the S&P 500 target price of 1040 to 1100 remains very real.

Can the markets go even lower than that? Yes, and the possibility of that is becoming more and more a potential reality.

The chart below shows the short term price levels which will be watched closely for a technical bounce. Long term however we still maintain that the markets will eventually break the July lows and go still lower.