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Narrow Range for McClellan Oscillator

 
weekly Chart In Focus

A quiet market is one of the hallmarks of a price top, when no one seems to care enough about risk to move the market very much in either direction.  The NYSE’s McClellan A-D Oscillator has recently been displaying some of that quietness, trading only a few points above and below zero until just the past couple of days.  That quietness in Oscillator readings is telling us something about that very complacency I was talking about.

So to look at it more quantitatively, this week’s chart looks... Read More

Correlation Between VIX and SP500

 
weekly Chart In Focus

When the normally inverse correlation between the VIX Index and the SP500 gets crazy, if offers us a great message.  That is the point behind this week’s chart, which is based on a great observation by Jesse Felder of www.TheFelderReport.com

Jesse first wrote about it in a Tweet here back on March 3, 2017, and that same day it was featured in a MarketWatch article.  I did my own investigation, which revealed that this is indeed a really cool insight. 

What Jesse did, and what I have... Read More

The Unexplainable 4-Year Rerun

 
weekly Chart In Focus

President Obama and President Trump are entirely different types of leaders.  No one would contest that.  And the second term of a presidential term is a lot different from a first term in the way that a president interacts with the public, with Wall Street, with Congress, and with the economy.  So there should not be any stock market similarity between Trump’s first term and Obama’s second term. 

And yet the pattern correlation to four years earlier which began during Obama’s second term... Read More

When Not To Go Short Volatility

 
weekly Chart In Focus

The VIX is a supposed “volatility index”, but it does not really measure actual volatility.  Instead, it measures what options traders think about volatility.  All of the various investment vehicles that have popped up in recent years that are tied to the VIX have enabled traders to go long or short “volatility” with relative ease compared to a few decades ago. 

And the short volatility trade has been among the most profitable, especially since the Fed, ECB, and BOJ started various flavors... Read More

Junk Bonds Don’t Confirm Higher Highs

 
weekly Chart In Focus

The SP500 has rebounded from the May 17 one-day panic to push to a higher high.  But high-yield bond ETFs like HIO are not confirming that higher high, and that’s a problem.

High yield bonds typically move in sync with the stock market rather than with T-Bonds.  They are all about liquidity and default risk, much more so than inflation and other interest rates.  So when liquidity starts to dry up, that condition often shows up first in the high-yield bond market.  Eventually those liquidity... Read More

Will Labor Shortage Kill Housing Boom?

 
weekly Chart In Focus

We know by the message from lumber prices that the next 12 months should be a positive period for all sorts of housing related data.  New home sales, for example, tends to follow in the footsteps of lumber price movements with a lag time of about 1 year.  So because lumber prices have been trending strongly higher, that should mean higher numbers of new home sales.

This is especially true with all of the “echo-boom” generation getting into their late 20s, and starting to look at buying... Read More