Pull the trigger with confidence.

The VIX Index was invented in 1989, in a series of papers written by Menachem Brenner and Dan Galai.  The CBOE introduced it as an index in 1993, initially using SP100 (OEX) options, but then changing to SP500 options in 2003.  See https://cdn.cboe.com/resources/indices/Volatility_Index_Methodology_Cboe_Volatility_Index.pdf for more information on the history of the VIX, and its current formulation.

The CBOE then introduced the first futures contracts based on the VIX in 2004, but those... Read More

There was some excitement in the world of technical analysis the past two weeks as we saw 5 separate signals fire for something called the Hindenburg Omen.  This is a warning signal of trouble, but trouble does not always come.  What is fair to say is that Hindenburg Omen signals have appeared at every major stock market top going back several decades.  But they have also appeared at other times.

The creator of this signal was the late James Miekka, who died tragically in 2014.  Miekka was... Read More

The Challenger, Gray, & Christmas report on corporate layoffs just posted at 153,000, the worst October since 2003.  Economists are floating numerous explanations for this, including the government shutdown, tariffs, and other "usual suspects".  But I am going to put the blame right at the feet of the Federal Reserve, for having kept interest rates too high since 2023.

My definition for "too high" is the 2-year T-Note yield, shown in this week's chart.  I first wrote about that here in... Read More

I wrote here back in September 2025 about how the total amount of Reverse Repurchase (RRP) agreements at the Federal Reserve was bottoming out, and how they were thus ceasing to be an issue for the stock market.  That thesis needs a review, given the past few days' data.

To review, a regular Overnight Repurchase Agreement (or Overnight Repo for short) is a transaction between the Fed and a member bank in which the Fed effectively lends money to a bank.  The process involves the sale of... Read More

Crude oil futures prices in the US have dipped to below $60/barrel, in spite of sanctions on Russian oil and other stresses in the energy markets.  Proponents of "Drill, Baby, Drill" are celebrating this price drop, as are motorists enjoying low average gasoline prices.

But the party is about over, according to the leading indication given by gold prices.  This week's chart is one I have shown here before, and it involves shifting forward the plot of gold prices by 19.8 months to reveal how... Read More

The US stock market is overvalued now by a long list of measures, and that has not mattered yet.  That is the key point about valuation - - it does matter, but not necessarily on anyone's schedule.  Valuation is a "condition", not a "signal". 

Years ago, Dr. Robert Shiller developed his "Cyclically Adjusted P/E Ratio" (CAPE) for the SP500, and he used prior data from the Cowles Commission to extend back all the way to 1871.  This week's chart shows Shiller's CAPE, and I left off the first... Read More

Breadth divergences are just now starting to appear in the stock market, but there is another bearish divergence which has been operative for a few months.  This week's chart shows an interesting relationship between the stock market and the spread between yields on US and German debt.  Specifically this spread compares the US 10-year to the equivalent "bund".  That term is short for "Bundesbank", the German central bank.  Bundes means federal in German.

Normally this spread goes up and... Read More

Crude oil prices have been in a downtrend since shortly after the big peak caused by Russia's invasion of Ukraine.  Those prices are near a turning point now, according to data from the CFTC's weekly Commitment of Traders (COT) Report.

This week's chart shows the net position of the big "commercial" category of traders.  To qualify as a commercial a trader must be either a producer of the subject commodity, or "use it in their trade or business".  This chart depicts the raw net short... Read More