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Major Cycle Low Upcoming in Gold

 
weekly Chart In Focus

There is a major cycle low looming for gold prices.  Ideally it should arrive as a price low in late 2016.  But based on history, it could arrive anytime between August 2016 and March 2017, and still fit within the normal tolerance.

Defining a normal tolerance for gold’s 8-year cycle is a pretty iffy proposition.  We have only 5 prior examples to go by, and while they cover a period of over 40 years, anyone who ever studied statistics knows that n<30 is problematic.  If you want to wait... Read More

Strong Summation Index Promises Higher Highs

 
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The strong breadth numbers which produced a new all-time high for the A-D Line this year also produced a really high reading for the Ratio-Adjusted Summation Index (RASI), the highest since 2012.  And that action conveys to us the promise of higher price highs.

But it does not preclude a meaningful correction first, and we appear to be in the midst of that right now.  The RASI is falling, as it typically does during corrective periods. 

The basic point is that after a correction like we... Read More

A May-November Relationship

 
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The big mantra the past two weeks is the old Wall Street saying, “Sell in May and go away”.  That became an old saying for mostly good reasons.  But what many do not realize is that it works differently in election years. 

Where the May to November period is most reliably weak is in the first two years of a presidential term.  It is even an up year during most 3rd years, except that the big crash of October 1987 pulled down the average in a big way. 

During election years from 1936 to... Read More

T-Bonds Repeating Pattern of Year Ago

 
weekly Chart In Focus

This time, the headline says it all.

So many investors believe that it is the Fed that determines interest rates, and thus bond prices.  Or alternatively, it is the mysterious force of inflation that drives interest rates.  But the current evidence suggests it is just the calendar which is really in charge. 

Seasonality is not historically a part of how T-Bond prices behave.  You can calculate an annual seasonal pattern for anything.  That does not mean it will be meaningful, or reliable.... Read More

NAAIM Exposure Index Highest In A Year

 
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The rally off of the February 11 low for the SP500 has been called “the most hated rally” by some in the financial media.  But it does not appear to be hated according to a lot of the sentiment indicators.

The National Association of Active Investment Managers (NAAIM) publishes its NAAIM Exposure Index weekly, and is a survey of its members concerning their average exposure to US equity markets.  In theory, it could range from -200 to +200, if all managers were leveraged short or leveraged... Read More

Fishhook Signal For Gold

 
weekly Chart In Focus

Gold revealed an interesting bit of information this week when it formed what we call a “fishhook” structure.  Fishhooks are important because they can reveal the potential for a more powerful move.

For background on this signal, see this article in our Learning Center on “Fishhook Rules”. 

The basic point is that a fishhook forms in the chart of a Price Oscillator (and some other indicators) after a high value top, and then as the Price Oscillator is working its way back down toward... Read More

Eurodollar COT Throws a Curveball

 
weekly Chart In Focus

This week I revisit one of my favorite indicators.  But “favorite” does not mean perfect. 

In 2010, I figured out that the net position of commercial traders of eurodollar futures gave a great leading indication for what stock prices would do a year later.  Subsequent research showed that this has been going on since around 1997, which is when the eurodollar futures contract really started to come into prominence as a financial product.  The only explanation I have for why it “works” is... Read More

Big-Money Traders Are Short T-Bonds Big-Time

 
weekly Chart In Focus

Commercial traders of T-Bond futures have been increasing their net short position in a big way in recent weeks, and Friday’s COT Report showed a renewed upward acceleration.  Normally I find that prices and the commercials’ net position are positively correlated. If prices rise, the smart money will short more. If prices fall, they’ll turn into buyers. OK, got it.

Bond prices topped weeks ago, but the commercials are continuing to ramp up their shorts at a rate that is just about as fast... Read More

 
Daily Timing Chart

 

05/25/2016 IssuesVolume(000s)
McC OSC 35.164 38754
Sum Index 3178.042 1422136

More Data

The McClellan Oscillator

 

OscillatorCreated 1969, the McClellan Oscillator is recognized by technical analysts as the essential tool for measuring acceleration in the stock market. Using advance-decline statistics, it gives overbought and oversold indications, divergences, and measurements of the power of a move.