Stock Market Timing and Hours Worked

The charts to the right (copied from Calculated

Risk) may provide a new way to time the end of a bear market.

(Click on charts to enlarge.)

One of the several "conundrums" both after the 2001 recession ended in the fall of 2001 and then after the next bottom of the stock market was not a durable one and was retested in the winter-spring of 2003 was why this was occurring. One obvious answer was that valuations were so stretched that they were just too high.

Perhaps another one is the amazing closeness

over every economic cycle shown with hours

worked. When they start up with any force

as a recession ends, the stock market starts

upward and has made its final bottom.

Also, the speed of the upward move in hours

worked roughly correlates with the strength of

the move of stocks off the bottom.

Considering the so-called jobless recovery in 1991-2, it helped cost Bush I his job. The 2001 recession ended so early in Bush II's term that jobs were growing by 2004.

Now, multiple comments from Manpower Inc., CFOs of large companies surveyed by Duke University's business school and from experts who have gotten this cycle right such as Nouriel Roubini suggest that hours worked have probably not bottomed.

Considering the major bull market that has already occurred off the severe bear market low, the above timing signal is flashing a great big yellow light, if not a red one, for stock averages.

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