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Bonds and Gold in Unusual Correlation

weekly Chart In Focus

Gold prices have shown an unusually strong correlation to bond prices this year.  This is not normal, and the two are not usually marching in lockstep like this. 

The strong correlation began around May 2016.  It may just be a coincidence that May 2016 was when Saudi Arabia started selling off the holdings of T-Bonds from its sovereign wealth fund, an effort to fund their governmental expenditures in an era of low profits on oil sales.  See http://ticdata.treasury.gov/Publish/mfh.txt

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McClellan Oscillator for Corporate Bonds

weekly Chart In Focus

The sharp selloff recently in T-Bond prices has bled over into “investment grade” corporate bonds.  But signs from the data on those bonds now suggest that the bond market is at an oversold extreme.

The McClellan Oscillator that my parents created back in 1969 is usually used for the Advance-Decline data on NYSE-listed stocks.  But it can be used on any other sort of market breadth data.  FINRA reports such data on corporate bonds every day at this link.  They also make historical data... Read More

Peculiar Move by Dollar and Small Caps

weekly Chart In Focus

The two big stories since the Nov. 8 presidential election have been a surge higher for the US dollar, and a big outperformance by small cap stocks.  The two can be seen in this week’s chart, although understanding what is happening takes a little bit of explanation.

The upper plot is the US Dollar Index, a combination of multiple currencies exchange rates versus the dollar.  It is perhaps not a perfect representation of the overall value of the dollar, but it is the most commonly used... Read More

Copper Spike

weekly Chart In Focus

Investors worldwide have suddenly caught a whiff of inflation, and have overreacted in response.  That overreaction can be seen quite well in the big spike higher in copper prices, a rally which is now starting to be dismantled.

One fascinating aspect to that rally is that it came out of a big symmetrical triangle structure.  Symmetrical triangles carry that name because the slopes of the upper and lower boundary lines are roughly equivalent.  Such triangles are indecision structures, and... Read More

The Market, Under a New President

weekly Chart In Focus

Investors get fearful ahead of a big election, because the outcome is unknown.  Unknown risks are what investors fear most.  Now that the result is decided, we have known risks to deal with. 

Investors were also fearful ahead of the 2012 election, which also had a surprising (for some) result.  Recall that Gov. Romney had been up by 1-4% in the last polls leading up to that election.  Polling that year was admittedly disrupted by the arrival of Hurricane Sandy, which also shut down the... Read More