StockPunk

The folks at Earnings Whispers have an interesting article about the recession and how unemployment numbers may be a positive sign. You have to register at their site, but they have lots of great information. Here's an excerpt:

In January, we projected a 20% decline in the S&P 500 and a 28% decline in the Nasdaq Composite with a bottom between May and October, but we also said we expected the S&P 500 to end the year above 1,300. Now that we have more data about the current recession, we are projecting the S&P 500 to be above 1,500 around August 2008 - up an additional 9.5% from its current level - as long as the employment data continues to weaken and the Fed continues to lower interest rates.

But stock prices dont go up in a straight line so the question is how are we going to get from point A to point B? not to mention the fact that we need to look for confirmation of our thesis along the way as well. This week has the potential to confirm or quickly make us doubt our position as the S&P 500 nears resistance and the CBOE Volatility Index (VIX) hits its support line. All of this suggests that the market is a little top heavy right now and is likely to pullback, but if the uptrend is intact, the S&P 500 could break above resistance and it could be swift. We should also point out that the chart on page one of this report shows declining peaks in our advance/decline oscillator for the Nasdaq Composite while the index has seen rising peaks. This is a sign of near-term weakness.