Recession has already started!

Economist Claudia Sahm developed the “Sahm Rule,” which states that the economy is in recession when the unemployment rate’s three-month average is a half percentage point above its 12-month low. As shown, the latest employment report has triggered that indicator. This is considered the most reliable indicator for recession. So we can safely say we are already in a recession. 

I guess, the market has sensed it by now and these days of harsh selloffs do feel like that.

 

 Given that, be ready for an economic crisis getting intensified. I think we are still at the early stage, facing a wide spread of loss of employment that is leading toward loss of confidence. The ultimate consequence of the crisis is far from being obvious to most people but when it comes, it will be extremely painful for investors. So be careful if you have the habit to chase the market!

 

 

 

If you follow up the market closely, you may have noticed that SPX did plunged all the way down to 5303 before bouncing up a bit. Likely this is the short-term bottom for the next few days. I think a dead-cat bounce is very likely next week, especially if SPX retests 5300 with a positive divergence developed. I will be ready to buy if that happens.