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Is Iron Ore Weighing Down Stock Market?

 
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Some U.S. stock market investors are getting worried about the price of iron ore in China.  This week’s chart helps to show why.

One analyst who noticed this relationship was Alastair Williamson of Stock Board Asset, who published this Tweet on April 18, 2017:

StockBoardAsset tweet

It is definitely an intriguing chart, and a relationship I had not explored before.  I have come across a large number of interesting intermarket relationships like this one, and it is always fun to find (or be shown) a new one. ... Read More

Gold Resolves Some Bearish Divergences

 
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A week ago, it was not looking good for the gold bulls.  The dollar price of gold had not yet made a higher high, even though the Japanese yen had already pushed to a higher high.  When divergences like that happen, it is typically bearish news for both gold and the yen.

But what looked like a bearish divergence then has now been resolved in favor of the bullish case.  The price of gold has now joined the yen in making higher highs. 

This is an important point for all chartists to... Read More

AAII Survey Readings Nearing A Bottom Indication

 
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The bullish percentage in the AAII survey has been falling during 2017, and is getting close to a low enough reading to mark a good bottoming indication for prices.  That fits well with my expectation from other sources for a low this month.  But before you go interpreting the AAII numbers, it is best to understand some of their quirkiness. 

The raw data come from responses by AAII members on that organization’s web site, and the data are published weekly at... Read More

Lumber and Eurodollars: A Curious Intermarket Relationship

 
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Intermarket relationships are fun.  They often reveal surprising relationships, and those relationships are all the more fun when they offer us insights from which we can make money.

This week, we look at the important data from the Commitment of Traders (COT) Report, which I have previously shown have importance for the stock market.  See this, and this, and also this

You might wonder, who cares about COT data for eurodollar futures.  Well, you would, if you knew the great leading... Read More

Why Don’t We Use Just Common-Only A-D Numbers?

 
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For as long as there have been Advance-Decline (A-D) data that people have been interested in following, there have been criticisms of that very A-D data for including “the wrong sorts” of issues.  Back in 1962, Joe Granville and Richard Russell both pointed to the big divergence between the NYSE A-D Line and the major averages like the DJIA.  That divergence preceded a 27% decline in the DJIA, so in that moment the A-D Line suddenly became much more interesting to a lot of people.

But... Read More

DJI Oscillator Positive Index

 
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The DJIA itself might be hanging around all-time highs, but its components are telling a different story.  When a higher index high is made on declining participation, that’s a problem.

The indicator in this week’s chart is one I thought up about 20 years ago, one of a set of indicators that look at the 30 Dow stocks to see what they are doing.  This is a type of “diffusion index”, which describes an indicator that looks at the behaviors of each member of a group in order to generalize... Read More

Huge Imbalance in Crude Oil Positions

 
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There is a giant wall of short positions held by the smart-money “commercial” traders in crude oil futures, and it is going to lead oil prices to come crashing down. 

Each week, the CFTC reports on the numbers of long and short positions held by futures traders.  They are broken down into 3 separate groups:

Commercials – Those engaged in the business related to that commodity.  They are the big money, and thus presumably the smart money.  Think Cargill for grains, or Goldman Sachs for... Read More