E Nuff Sed's  Instablog

Employment is considered a lagging indicator for the economy.  Canada being the largest trading partner of the United States can be considered a "leading indicator" for the US economy.

The Canadian employment picture turned decisively in September signaling that the recession in the 8th largest economy in the world has ended and the economy has started to expand.

Click here for Statistics Canada Chart.

The Canadian economy added 31000 jobs (most of them full time jobs).  This is remarkable as a northern country the economy usually sheds construction jobs in the fall and winter.

With its northern neighbor now having turned the corner can the giant US economy (10 X the size of Canada) be far behind?

The Coppock's guide continues to sharply curl upwards.  The coppock guide is a long term market timing oscillator and is a reliable indicator of a market bottoms and tops.


September is now the 5th month since the Coppock signalled a "buy".   As you can see from the chart below, the guide has an enviable long term record of signaling a "buy" recommendation, notwithstanding a couple of false positives.



I have calculated the Coppocks guide over the last 109 years.

For a decent coverage of the Coppock guide read the following article from the Telegraph.

www.telegraph.co.uk/finance/comment/tom-...

An indicator I follow the S&P 500 bullish Percent index ($BPSPX) is now at the highest level since 2003.

This means that currently 80% of all stocks in the S&P 500 are showing bullish chart patterns.

In order to understand the bottoming process I conducted a segment analysis of past severe bear markets.   I define a segment as a > 20% declines/rallies contained within a overall

I looked at the five worst bears.  Here is what I found,

Only 3 bears were multisegmented monsters. 
The greatest of course was the 29-32 bear with 11 distinct segments.  This monster contained 5 massive sucker punches which put an entire generation off equity investments.

The second multisegment bear was the tech crash of 00-02.  This contained 5 segments. 

The third was which just happened.   Assuming Mar 9th to be the final low, this bear had 3 segments.

Multi-segment bears are relatively rare and for 2 to occur consecutively is very odd.  It could be explained by the fact that the 00-02 bear and 07-09 bear are actually part of the same mega bear, though technically they are distinct as the 07 high (on the S&P 500) exceed the 00 high.

Bear Market - Segment Analysis

As the economy improves the yeild spread between 10 year TIPS and conventional 10 year treasuries have widened from the panic sticken level in December.

See graph from St. Louis Fed here.

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