How Can the Worst Employment Report Since December ‘74 Be a Good Sign?
The November employment report showed that 533,000 jobs vanished from the U.S. economy for the month. This, along with a revision to October’s numbers, brings the total number of jobs lost this year to 1.8 million - making it the worst employment report since December 1974.
In December ‘74, the economy showed job losses of 602,000. And that month also marked the end of the bear market that had gripped the U.S. for two years. From December ‘74 through June ‘75, the Dow rose an incredible 42 percent.
Could we be looking at a replay - where things look the bleakest right before a turnaround?
The market is certainly due for a bounce, and the oversold levels are where they were in ‘74, so the similarities go further than just the employment numbers.
If the next six months play out like things did in ‘74-’75, where would it take the market? The Dow would jump from where it is now to approximately 11,800.
So how do you bet on history repeating itself? The best way is to use limited capital with options - and if you are going to stick with the comparison, you want to buy calls in the AMEX Diamonds Trust.
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