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Bond Market Knows What Fed Should Do

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This article first appeared in McClellan Market Report #515, published Sep. 21, 2016, and reflects a theme we have reported on multiple times before. 

We have an unblemished 21-year track record of predicting what the Fed should do, with 100% accuracy.  What the FOMC actually does is often different from what it should do.  As of the Sep. 21 FOMC meeting announcement, the Fed has missed another chance to do the right thing. 

There is only one reason why the FOMC should ever change the... Read More

McClellan Oscillator for High Yield Bond A-D Data

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The regular McClellan Oscillator is based on Advance-Decline (A-D) data for the NYSE.  But the same calculation can be done on other sets of A-D data.  This week’s chart looks at an interesting example of that, with a big message for the current moment.

The Financial Industry Regulatory Authority (FINRA) kindly publishes data on Advances and Declines for corporate bonds, breaking out totals for Investment Grade, High Yield, and Convertible.  Each category is interesting in its own right,... Read More

DJIA Leads Poll Numbers

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We can see ahead of time which way the poll numbers are going to swing by looking at the stock market.

This is a phenomenon I have been tracking since the 2000 election, when I started gathering poll data and comparing it to the movements of the stock market.  I found out then that the movements of the DJIA were showing up a week later in the Gallup and Zogby poll numbers for the presidential race. 

This discovery allowed me to make one of the most accurate calls I have ever made in 21... Read More

US Oil Inventories at Record Level

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The EIA reported this week that U.S. total combined stocks of crude oil, gasoline, distillates, and other oils is at another all-time (i.e. since 1990) high, which should continue to put downward pressure on oil prices.  These inventory levels used to regularly peak out at around 1.1 billion barrels, but now they are at 1.4 billion barrels.  Note: Wolf Richter of wolfstreet.com has also written about this recently

This rise blows away the scale of all of the previous fluctuations.  Note... Read More

Echo Boomers Will Fire Up Housing Market

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Housing related stocks are seeing an earlier than called for push to a higher high.  But if lumber prices are right, there are lots more gains to come.

By that, I am referring to the way that lumber prices tend to give a 1-year leading indication for the share prices of housing related stocks, like those which make up the HGX Index.  In the chart above, the plot of lumber prices is shifted forward by 1 year to reveal how the up and down movements seen in lumber futures prices tend to get... Read More