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SPY Shares Outstanding Showing Topping Condition

 
weekly Chart In Focus

I like to watch the data on the number of shares outstanding in certain select ETFs, and one of the best for this purpose is the biggest one, SPY.  It tracks the SP500, and it currently has $196 billion invested in it.  So it is a big deal. 

The number of shares outstanding fluctuates with investor interest in the stock market.  As more people start buying shares, the share price can start moving ahead of the net asset value (NAV), and so the sponsoring firm issues more shares, thereby... Read More

Gobs of Breadth: The Haurlan Index

 
weekly Chart In Focus

If you want to have a recipe for a sustainable bull market, the best ingredient to start with is “gobs of breadth”.  Strong A-D data is a sign of plentiful liquidity.  The stock market can encounter other types of problems, but if liquidity is strong then investors can get past momentary worries about Brexit, earnings, valuations, etc. 

I like to say that there are really only 2 fundamentals that matter for the overall stock market:

1) How much money is there? and

2) How badly does that... Read More

NIRP Disrupting 60-Year Cycle

 
weekly Chart In Focus

The 60-year cycle in interest rates has been operating for as long as interest rate data have reliably been collected.  And right now it is saying that we should be in an upward trend for interest rates, lasting until 2040.  So the negative interest rate policy (NIRP) being foisted upon us by the smart people who run the world’s central banks is running contrary to that cycle, and thus is storing up problems for the future.  Delaying the inevitable just makes the inevitable that much more... Read More

Brexit Vote Brings a 10-1 Down Volume Day

 
weekly Chart In Focus

The panic over the surprise outcome in the British referendum over leaving the European Union brought about a fairly rare market event: a 10-1 down volume day.  That means the amount of share volume in the stocks that were down that day (down volume) exceeded the up volume by more than a factor of 10. 

We have only had 8 of these 10-1 down volume days in the past year, all associated with exhaustive selloffs.  I say “associated with”, because the day of the 10-1 down volume reading is not... Read More

Uranium’s Bearish Message for Gold

 
weekly Chart In Focus

With the Brexit vote now decided, a lot of attention has turned to gold as a supposed “safety” asset.  Most traders who lived through the big decline of 1980s do not think of gold as a “safe” asset.  And the message of this week’s chart is that expectations for a big gold price rally from here may be misplaced. 

A year ago, I wrote here about the role of uranium prices as a leading indication for what gold prices will do later.  A 7-month lead time seems to be ideal for getting the best fit... Read More

ECB QE Doing Opposite of Objective

 
weekly Chart In Focus

I like to say that there are only 2 fundamental factors which matter for the overall stock market:

1. How much money is there?

2. How much does that money want to be invested?

Change either of those, and the market will move up or down.  But 2016 is showing us a perverse version of that.  We are in opposite-world now. 

The Fed has backed away from the QE game, and is wishing it could find a sufficient excuse to start normalizing interest rates.  But the rest of the world is heading... Read More

Dollar’s Up Move Not Confirmed by Stocks

 
weekly Chart In Focus

Some people think they know what the relationship is between the US Dollar Index and stock prices.  But as I noted in a Chart In Focus article over a year ago, the correlation between stocks and the dollar regularly flips from positive to inverse.

A more lasting relationship is shown in this week’s chart.  It compares the Dollar Index to a relative strength ratio comparing the Russell 1000 and Russell 2000 Indices.  That relative strength line moves upward when large caps are outperforming... Read More