Jim, this is a great article and thank you so much. On your estimates of the downside of the S&P why did you choose to take current levels and then apply your decline of 32.5% to get to an S&P closing target of 2,856 vs. treating the peak in the market of 4796.56 and then applying that so we'd get 3,237 which is obviously ~13% higher. In October 2022, the S&P was looking at a 25% decline from its peak and if you were looking on the sidelines waiting to deploy cash and you believed that was a good entry point you would obviously be up significantly YTD, however if you were in the Mike Wilson camp and seeking the S&P to hit 3200 / 3000 (~30% decline) you would be missing this rally. Thanks again for your thoughts!
Hi Nick, the one known that we have is where the Unemployment Rate "warning signal" was triggered. So my analysis went back and looked at the "trigger point" and then measured the peak-to-trough move for the S&P 500 from that point. Otherwise, when we're in the middle of it (like we are now), we don't necessarily know where the top was or is going to be. Hopefully, that makes sense.
Ahhh apologies! I had mixed the 32.5% decline with the peak to trough decline of 37.5%. When we apply that median decline we get 2997 on the S&P which probably could serve as a very good entry point as well. Thank you again for pointing out the error in the calculations. Do you see any validity to doing the same for the Nasdaq or any of the other indicies since each could hit their points of relative value at different times.
That's a terrific look at unemployment; thanks very much for the insightful charts and tables. Greatly appreciated!
Thank you for the kind words, JS!
Jim, this is a great article and thank you so much. On your estimates of the downside of the S&P why did you choose to take current levels and then apply your decline of 32.5% to get to an S&P closing target of 2,856 vs. treating the peak in the market of 4796.56 and then applying that so we'd get 3,237 which is obviously ~13% higher. In October 2022, the S&P was looking at a 25% decline from its peak and if you were looking on the sidelines waiting to deploy cash and you believed that was a good entry point you would obviously be up significantly YTD, however if you were in the Mike Wilson camp and seeking the S&P to hit 3200 / 3000 (~30% decline) you would be missing this rally. Thanks again for your thoughts!
Hi Nick, the one known that we have is where the Unemployment Rate "warning signal" was triggered. So my analysis went back and looked at the "trigger point" and then measured the peak-to-trough move for the S&P 500 from that point. Otherwise, when we're in the middle of it (like we are now), we don't necessarily know where the top was or is going to be. Hopefully, that makes sense.
Ahhh apologies! I had mixed the 32.5% decline with the peak to trough decline of 37.5%. When we apply that median decline we get 2997 on the S&P which probably could serve as a very good entry point as well. Thank you again for pointing out the error in the calculations. Do you see any validity to doing the same for the Nasdaq or any of the other indicies since each could hit their points of relative value at different times.
Great work. Thanks!
Thank you for the kind words, Derek!