Strategist: Bulls Back When Jobless Claims at 400K

If new claims for jobless benefits can drop to 400,000, says James Paulsen of Wells Capital Management, the bulls will take over and the markets will reach new highs for the year.

"If we develop a sense that there's a substained job recovery," says Paulsen. "Then I think a lot of these other issues that we're scared about start to pale in comparison."

Initial claims for jobless benefits jumped after three straight declines, the Labor Department reported Thursday. The number of claims climbed from 12,000 to a seasonally adjusted 472,000. Jobless claims tends to be an early read on where the economy is, says Paulsen. When claims were moving down, we were close to accepting a recovery, but the increase reported Thursday brought fear back to the markets.

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