This 'Bad News' Indicator Is Up Almost 15%

Bad news is bad news... until it's not. As investors, we're in an industry that constantly twists meanings to meet narratives. Every expert is looking for a way to make the latest news or data fit his or her investment angle. [Chaikin PowerFeed]( This 'Bad News' Indicator Is Up Almost 15% By Pete Carmasino, chief market strategist, Chaikin Analytics Bad news is bad news... until it's not. As investors, we're in an industry that constantly twists meanings to meet narratives. Every expert is looking for a way to make the latest news or data fit his or her investment angle. It's confusing. But at some point, bad news can become good news. That's the case today with one indicator that typically signals bad news for Americans... In normal times, it's not a good thing for the U.S. economy when this indicator is up. But as I think most of us can agree... today isn't normal. Now, this "bad news" indicator is good news – at least in the short term. As you'll see today, it's rising off its most recent low. And many investors are rejoicing in this development... Recommended Links: [A New Financial Crisis Just Arrived]( A new financial crisis has quietly taken hold of the U.S. stock market. And if you're following the usual crisis playbook... staying on the sidelines... or hoarding cash... your money is more at risk than at any other time in recent history. But there's a dead-simple way to take advantage of what's coming instead of being blindsided. [Click here for this major story](. [Wall Street legend warns: 'A new dawn is coming']( He called the Priceline collapse in 2012, the 2020 crash, and the 2022 bear market. Now he says a new dawn is coming to U.S. stocks. It's time to throw out the investment blueprint of the last decade and prepare for a massive shift. [If you've lost money over the past two years, this changes everything](. If you haven't guessed by now, I'm talking about the unemployment rate. Folks normally view rising unemployment as a bad thing. When they hear unemployment is up, they worry about the economy's future. And in many cases, stocks sell off on the news. That's how it works in "normal" times, at least. But as I said earlier, it's different today... Inflation is still high. And the Federal Reserve has hiked interest rates to historically high levels to combat it. That has turned everything on its head in the U.S. economy. So for months, I've believed that when unemployment started to tick higher, the stock market would react to the upside. That's because many investors see the same thing... Lower rates are coming. You see, the Fed always cuts the federal-funds rate when unemployment rises. That's the benchmark interest rate in the U.S. – all other interest rates ebb and flow with it. And so far this year, unemployment is up almost 15% off its low. Take a look... [Chaikin PowerFeed] Think about it this way... Since rates were so low for so long, demand for "cheap money" skyrocketed. That eventually created inflation – which we've dealt with following the COVID-19 pandemic. So to make money more expensive, the Fed increased rates. It did that to kill inflation. Now, the opposite is true. Demand is slowing down. That's clear from many retailers' earnings reports. For example, home-improvement giant Lowe's (LOW) and retail titan Walmart (WMT) both pointed to this idea in recent weeks. And importantly, as I just showed you... unemployment is rising at the same time. That's a recipe for a recession. You would think most folks would view that as bad news. But not today... Rather, this one-two punch of slowing demand and rising unemployment is pushing the stock market higher – and fast. The S&P 500 Index is up roughly 10% over the past month. Put simply, the anticipation of the Fed's eventual rate cut is a huge sentiment boost... The market previously expected the first rate cut to happen next June. Now, it believes it could happen in April or May. The probability of a rate cut in the first half of 2024 is rising. Stocks are rallying on that idea in the short term. And yet, [as I said in September]( the market won't like the Fed's rate cut once folks realize it means things are slowing down. So let's enjoy the rally while it lasts. But don't get careless. Bad news won't be good news forever. Eventually, we'll return to normal times. Good investing, Pete Carmasino Market View Major Indexes and Notable Sectors # Hld: Bullish Neutral Bearish Dow 30 +0.150% 11 16 3 S&P 500 -0.070% 154 248 95 Nasdaq -0.100% 42 43 14 Small Caps +0.510% 538 964 424 Bonds +1.260% — According to the Chaikin Power Bar, Small Cap stocks and Large Cap stocks remain somewhat Bullish. Major indexes are mixed. * * * * Sector Tracker Sector movement over the last 5 days Real Estate +2.07% Materials +1.03% Financial +0.65% Discretionary +0.56% Information Technology +0.06% Utilities -0.08% Industrials -0.18% Staples -0.27% Health Care -0.58% Energy -0.66% Communication -1.43% * * * * Industry Focus Regional Banking Services 84 47 9 Over the past 6 months, the Regional Banking subsector (KRE) has outperformed the S&P 500 by +1.43%. Its Power Bar ratio, which measures future potential, is Very Strong, with more Bullish than Bearish stocks. It is currently ranked #7 of 21 subsectors and has moved down 1 slot over the past week. Top Stocks [rating] OSBC Old Second Bancorp, [rating] IBCP Independent Bank Cor [rating] THFF First Financial Corp * * * * Top Movers Gainers [rating] NTAP +14.63% [rating] GM +9.38% [rating] SCHW +6.81% [rating] HPE +6.44% [rating] ILMN +5.21% Losers [rating] CI -8.11% [rating] HUM -5.49% [rating] LVS -4.87% [rating] HRL -4.63% [rating] HES -4.15% * * * * Earnings Report Reporting Today Rating Before Open After Close PATH KR ULTA, ESTC, MRVL No earnings reporting today. Earnings Surprises [rating] SNOW Snowflake Inc. Q3 $0.25 Beat by $0.09 [rating] HRL Hormel Foods Corporation Q4 $0.42 Missed by $-0.03 [rating] SNPS Synopsys, Inc. Q4 $3.17 Beat by $0.14 [rating] DLTR Dollar Tree, Inc. Q3 $0.97 Missed by $-0.04 [rating] CRM Salesforce, Inc. Q3 $2.11 Beat by $0.05 * * * * You have received this e-mail as part of your subscription to PowerFeed. If you no longer want to receive e-mails from PowerFeed, [click here](. You’re receiving this e-mail at {EMAIL}. 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