The last time stock market legend Peter Eliades spoke to FOX Business host Neil Cavuto was during the “exact bottom” of the 2022 market, just before a two-month rally.
While the Stockmarket Cycles publisher and editor was optimistic at the time, on Monday’s “Cavuto: Coast to Coast” he said he’s returning to his bunk.
“I’m going back to my bunk,” Eliades told Cavuto. “I’m going to be called a vicious and ferocious growling bear.”
While the market expert claimed he’s “100% a bike technician” when it comes to the market, there’s one fundamental figure that “really” stands out right now: unemployment.
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Hiring in the US cooled to its lowest pace in two years in December, but the labor market remained resilient in the face of higher interest rates, red-hot inflation and rising recession fears.
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Employers 223,000 jobs added in December, the Labor Department said in its monthly salary report released Friday, above the 200,000 jobs forecast by Refinitiv economists. Still, it marks a slight slowdown from November’s downwardly revised profit of 256,000 and marks the worst month for job creation since December 2020. The unemployment rate unexpectedly fell to 3.5%, a five-decade low.
“That’s one of the lowest values in the past oh, god, 60 years. You just don’t get below 3.5% that often,” Eliades said. “The problem is that it works exactly the way your instinct would tell you it would: Very low unemployment rates are usually very bearish for the market.”
From the 1970s to the 1990s, Eliades noted that there was never an unemployment rate like the recent low in December. But when the unemployment rate fell just below 4% in April 2000, “that was one of the big highs in market history. The NASDAQ was down 80, 90% after that, so this is a huge bear market,” he said.
A similar value from about 4% in February 1966 to 1982, Eliades noted, “the Dow Jones Industrial Average was headed for nowhere. It had hit 1,000 in February 1966, and it never broke that 1,000 in any significant way until 16 years ago. . later on.”
For 2023, Eliades predicted “another bad year” for the US economy, and the tipping point will be the volatility index.
“Last Friday, we closed at the lowest level for the VIX index all year through 2022. And what does that mean? Complete complacency,” said the market expert. “The market had a bad year, but we’re not going to have two bad years in a row, can we? We can’t have two bad years in a row, can we?”
Eliades further advised that whenever the VIX index sees this low, “you have invariably been at a market top in a bear market.”
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“If this is still a bear market, and I’m a big believer in that theory,” said the stock market legend, “we’re in trouble right now with this low, very low VIX.”
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Megan Henney of FOX Business contributed to this report.