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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

 
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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

 
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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

 
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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

Too Fast of a Sentiment Swing

 
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The latest numbers out of Investors Intelligence show that bulls are now up to 47.4% in their survey of newsletter writers and investment advisors, and bears are now down to 27.8%.  That takes the bull-bear spread up to its largest value since August 2015, and higher than the peak seen at the November 2015 price highs. 

On its own, the bull-bear spread is not yet at a super-high level which would mandate a price top.  But there is additional information in the rapid nature of the change in... Read More

Bad News: People Are Saving More

 
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Savers are masochists.  They deny themselves immediate gratification for the hope of future reward.  And more interestingly, they do this behavior more when the rewards are taken away.

Anyone who ever took Psychology 101 learned about what lab rats will do if you take away the food pellets.  They stop pressing the lever, and they lose interest.  But savers do not behave that way.  The Fed has taken away the incentive for Americans to be savers, through its Zero Interest Rate Policy, or... Read More

 
Daily Timing Chart

 

05/03/2016 IssuesVolume(000s)
McC OSC -98.700 -211075
Sum Index 4676.881 4567850

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.