Over the weekend for fun (yes I'm a nerd I guess) I downloaded
the monthly unemployment rate data from the Government Website
(Fred) added it to Excel and I also added a MACD Indicator.
My thought has always been that trends in economic data can
be predicted using standard Stocktrading indicators like MACD,
Stochastics, RSI etc. The unemployment rate especially
because it tends to trend for long periods of time vs changing
direction suddenly.
I've attached my chart and here's a quick 5 min video discussion
on what I found
As you can see simple MACD crosses work well, but also typical
positive and negative divergences form on the MACD just like they
do for Stocks and indexes. I found that using my confirmation
method (which I discussed in my weekend newsletter) to confirm a
MACD cross really catches the trends well and filters out the
divergence.
Again this chart has nothing to do with predicting the
stockmarket at this time, I'm simply showing you a little project
that I did on the weekend. I would also like to take other
economic data such as Housing data, ADP etc and create similar
plots. I bet if I took housing data for the last decade that
we would have seen clear negative divergence and a clear sell
signal in housing prices in 2005 or 2006.
Unemployment rate plotted with MACD
Posted by matt on 28th of May 2013 at 09:04 am
Over the weekend for fun (yes I'm a nerd I guess) I downloaded the monthly unemployment rate data from the Government Website (Fred) added it to Excel and I also added a MACD Indicator. My thought has always been that trends in economic data can be predicted using standard Stocktrading indicators like MACD, Stochastics, RSI etc. The unemployment rate especially because it tends to trend for long periods of time vs changing direction suddenly.
I've attached my chart and here's a quick 5 min video discussion on what I found
CLICK HERE to watch the video
As you can see simple MACD crosses work well, but also typical positive and negative divergences form on the MACD just like they do for Stocks and indexes. I found that using my confirmation method (which I discussed in my weekend newsletter) to confirm a MACD cross really catches the trends well and filters out the divergence.
Again this chart has nothing to do with predicting the stockmarket at this time, I'm simply showing you a little project that I did on the weekend. I would also like to take other economic data such as Housing data, ADP etc and create similar plots. I bet if I took housing data for the last decade that we would have seen clear negative divergence and a clear sell signal in housing prices in 2005 or 2006.
If you want another project...
Posted by a_l_ on 28th of May 2013 at 12:54 pm
I suspect initial claims (or maybe ROC on initial claims) is a pretty good leading indicator for equities.
Love the data....thanks!!!
Posted by hawkinslf on 28th of May 2013 at 11:45 am
perhaps my work with the
Posted by matt on 28th of May 2013 at 11:11 am
perhaps my work with the unemployment numbers and MACD was too nerdy for you guys to comment LOL
anyway I would like to add the RSI and Stochastics eventually to it
I just haven't had time
Posted by sbwoman on 28th of May 2013 at 11:24 am
I just haven't had time to watch the video yet. I'm excited and looking forward to watching it. Does that mean I'm a nerd too? haha