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Conflicting Messages for Crude Oil

weekly Chart In Focus

I like it best when all of my indicators agree, but I don’t get to enjoy that condition very often.  This week, I have conflicting signs for the future of crude oil.

The chart above shows gold’s leading indication for crude oil prices.  The offset is currently running at about 20 months; it has been as low as 11 months in past years.  The basic idea is that the movements of gold prices tend to get repeated in crude oil prices.

I call this phenomenon “liquidity waves”.  Think of a wave... Read More

QQQ Volume Gave Us a Tell

weekly Chart In Focus

The high volume seen in QQQ on a recent selloff was a signal that short term bearish sentiment had gotten overdone.

The tech selloff on Nov. 29, 2017 was a peculiar one, as it was not echoed elsewhere in the market.  Instead, we saw the FANG and semiconductor stocks down hard, but the DJIA was actually up on the day.  And then the next day, all of the indices were up strongly, as if whatever was worrying tech investors on Nov. 29 was magically all over.  The high volume in QQQ was a sign of... Read More

Running Out of Workers

weekly Chart In Focus

By now you have already heard that the U.S. unemployment rate is down to 4.1%, as of the October 2017 data.  But that is only one way to measure what is happening in the labor market.  This week, I want to explore some other ways to depict how many people are working, versus some other measures.

The first chart above compares the headline unemployment rate (year-end values) to another plot which factors in disabled workers.  At the end of 2016, the percentage of the labor force who were... Read More

China’s 10-year Yield Bumping 4%

weekly Chart In Focus

Even before President Trump’s Asia trip, Chinese 10-year sovereign bond yields have been pushing higher.  And that means we should expect the same for U.S. 10-year T-Note yields.

I wrote about this relationship back in May 2017, noting that a big spread between the yields in China and the U.S. can mark an inflection point for U.S. yields.  To identify when the spread was getting to an actionable point, I used 50-2 Bollinger Bands.  That designation means that the bands are set 2 standard... Read More

The New FANG Plus

weekly Chart In Focus

The InterContinental Exchange (ICE) has just rolled out a new futures contract called the NYSE FANG+™, based on the original four FANG stocks (Facebook, Amazon, Netflix, and Google) plus 6 others.  The FANG term was originally coined by CNBC’s Jim Cramer.  Some analysts are seeing this as a sign of peak excitement over the trendy tech stocks, akin to a magazine cover indication.  While they may have a point, they are likely early in making this call.

The ICE website describes the properties... Read More

Crude Oil Backwardation

weekly Chart In Focus

For the first time since oil’s big price collapse in 2014, the crude oil futures are now back into “backwardation”.  That is a condition where the near month contract is priced at a higher level than the farther out month contracts.  And it is a condition usually associated with price tops. 

For the entire uptrend from crude oil’s 2009 price low to its 2011 top (which interestingly coincided with Osama bin Laden being killed), oil futures were in strong “contango”, which is the opposite of... Read More

Bond McClellan Oscillator Almost Oversold

weekly Chart In Focus

When we talk about “the McClellan Oscillator”, we usually mean the indicator calculated on the Advance-Decline (A-D) numbers from the NYSE.  But a McClellan Oscillator can be calculated on any sort of breadth data. And when the same math is used on closing prices, we call that a McClellan Price Oscillator.

The chart this week shows a McClellan Oscillator calculated on investment grade corporate bond A-D data.  Those data are published each day by FINRA, and they correlate very closely with... Read More