The support lines are being knocked down, slowly but surely. No index has been spared, suggesting there’s nowhere to hide…. this is a full-blown correction.

To really make this point (and to offer some perspective) I’ve plotted the Dow, the S&P 500, and the NASDAQ Composite on the chart below. I’ve also added two sets of support lines. The red ones are the longer-term support line that had been guiding the market higher since June’s low. The blue ones are shorter-term, stemming from the lows made between September and November (and these are the ones that gave the market a little more wiggle room for a pullback).

As you can see, all the longer-term support lines were broken a few weeks ago. Two out of the three short-term lines have been broken as well. Only the NASDAQ hasn’t slipped under its short-term support level, but even a small move lower from here would do the job.

Major Indices Breaking Support Lines

No big deal, as we’ve been planning on things getting worse for a while. This is just perspective on how that’s taking shape. The dark green horizontal lines are my tentative target areas.

That’s not what I wanted to talk about today though.

Perspective on New, Continuing Claims

I love the media’s ability to sensationalize anything. The latest round of it came this morning with suggestions that the slight upticks in new and continuing claims was iron-clad evidence that we’re in the verge of the next Great Depression (my paraphrasing). While any job loss is painful, and while a new Great Depression may well be in the cards, the media may want to think about how inconsequential the numbers really were.

Oh, don’t get me wrong – I know they sound huge. Between 4.6 million ongoing unemployment claims and 480,000 new unemployment claims, it ‘feels’ earth-shattering. What they didn’t tell you is that both are still running about 1/3 less than they were in mid-2009.

As you know, I love charts, but I’m not really a chartist at heart. I use charts because it’s a way for me to organize and interpret a lot of information very quickly with much-needed perspective.

You know what the charts of new and continuing claims tell me right now? That despite the disappointing and higher-than-hoped job loss numbers over the last few weeks have been tough to digest, they’ve actually just been trending flat. Moreover, the bigger trend is still one that’s driving these figures lower. Take a look.

Unemployment Claims Data

Don’t get me wrong – I’m concerned too, since all major reversals start out as small blips. At this point in time though, the only thing we have with the claims data is a blip in a much bigger downtrend.

And you want to know the really stunning part that the media tends to not mention? The continuing claims data is two weeks old when you get it; the new claims data is a little less than a week old when announced. A lot can happen (for better or worse) in the meantime.

All the same, I’ll continue to watch these claims charts for a troubling move higher, but what we’ve seen so far isn’t troubling. Likewise, I still contend the markets got a little more ground to give up, but it’s not necessarily the beginning of a new bear market.

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