As you can see low-unemployment is early signal markets start to reverse, especially if there are divergences present between unemployment and it's RSI value. When low unemployment starts to break up this means that the market is saturated with jobs and many flourishing businesses, there has been a phase of economic euphoria and the climate becomes highly competitive as many loans/money are/is invested. I do reckon we see the dow return to the yellow dashed line as this is a long-term carrying trend.
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Another signal of reversal is the bearish divergence on the DOW between price and relative market strength (RSI value). The last rally is floating on lower momentum and hasn't retested the lower values of the RSI yet (below 31).
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When would someone buy and know we are entering depression? Around >7.70 unemployment rate. Don't only look at stock values, look at economic studies too!
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Shaded area's indicate US recession. fred.stlouisfed.org/series/UNRATE
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