Our favourite Stock Market Indicator In The World Continues To Work Perfectly

As a reminder that the stock market is largely driven by fundamentals (rather than headlines of Fed action) we like to look at the S&P 500 vs. weekly initial jobless claims, which is one of the best real-time measures of the economy.

Once again, the two lines work perfectly together (you have to flip over initial claims, of course, so that improvement results in the line going higher). Not only have the two lines matched up generally, they’ve even shown dips together, including most recently when the Sandy-related initial claims spike coincided with a dip in the stock market. They’re both near their best levels of the entire cycle.

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Photo: FRED

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