Consider it the Fed's chicken-or-the-egg dilemma: Do rising stocks drive down unemployment or does lower unemployment drive up stocks? One view of the relationship between the two suggests that it is the former and not the latter, hence the continuation of the central bank's easy-money policies. Nick Colas, chief investment strategist at BNY ConvergEx, has run a comparison and found an interesting relationship that often sees unemployment fall when stocks go up. The upshot: If the economy does get to Fed Chairman Ben Bernanke's target of 8 percent unemployment by 2012, that would mean the Standard & Poor's 500 would have to rise to 1,755-a stunning 35 percent gain from current levels and beyond even the already-bullish prognostications for this year. "That's not our price target, but it may just be the Fed's," Colas wrote in a note to clients. On average, a 15 to 20 percent drop in stock prices leads to an increase of 1.2 percentage points in unemployment; a rise of 30-35 percent in stocks usually leads to a 0.4-point drop in unemployment... http://finance.yahoo.com/news/Is-th...6.html?x=0&sec=topStories&pos=5&asset=&ccode=
I don't think these ratios are relevant this time. The relationship is there, but I think these times are unique and the numbers already skewed
Up Monday... check (11,891.93 +63.73 +0.54%) Up Tuesday... check (12,040.16 +148.23 +1.25%) Up Wednesday... check (12,041.97 +1.81 +0.02%) Up Thursday... check (12,062.26 +20.29 +0.17%) Up Friday... check (Dow 12,092.15 +29.89 +0.25%)
DOW 12169.54 77.39 +0.64% NASDAQ 2789.40 20.10 +0.73% S&P 500 1320.80 9.93 +0.76% 6 days in a row!!!! Risk free money continues and I dont think it stops anytime soon, they are going to drive the SPX to 1400+ by the end of February!
DOW 12186.53 94.38 +0.78% NASDAQ 2794.52 25.22 +0.91% S&P 500 1322.34 11.47 +0.88% No pullback at all since the opening bell!!!!
That's the only problem. You only rarely get pullbacks in the ES, so you are often forced to just jump in at the open, or chase it a little later on in the day. However, you would still be extremely unlikely not to make money if you chase it, although it goes against lots of people's natural instincts.