Over the weekend I created what I consider to be an absolutely fascinating chart of the unemployment rate going all the way back to February 1st, 1948. I plotted the unemployment rate based on the monthly figures I have going back to 1948. So the chart you will see below is essentially a monthly price chart except that the data is the monthly unemployment rate instead of stock prices.
I have never before seen the monthly unemployment rate plotted along side typical momentum indicators and oscillators. Everyone holds their breath before the monthly unemployment report comes out and counts on it as a major market moving event. But if it was so important then why is it not always viewed in chart form to help better identify unemployment trend, momentum (or lack thereof), and historical context ?
The unemployment rate can be tracked in terms of MACD, Relative Strength and many other indictors just like stock prices can. There are buy signals and sell signals in the unemployment rate and the validity of them is probably more significant than most other charts because we are dealing with monthly data points indicative of longer term trends which are less likely to whipsaw.
