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Crude Oil’s Drop Was Foretold by Gold

 
weekly Chart In Focus

The movements of gold prices tend to show up again about 20 months later in the movements of oil prices.  Crude oil futures have seen a big drop during 2020, exacerbated by falling demand from China because of the coronavirus outbreak there.  That has arguably made the magnitude of oil’s price drop bigger than it would have been, but the timing of the price drop in oil still matches gold’s message.

Gold’s leading indication does not always work perfectly.  The crude oil market got a little... Read More

Choppy or Simple Structures in McClellan Oscillator

 
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The McClellan Oscillator value on Feb. 5, 2020 was +23.36.  Taken all by itself, that is not a very useful piece of information.  Yes, it is above zero, meaning slightly positive recent acceleration upward in the Advance-Decline data on the NYSE.  But if you only know the number and nothing else, you miss out on important context. 

The number by itself does not tell you anything about the recent trend in Oscillator values.  When Sherman and Marian McClellan wrote their book, Patterns For... Read More

How are Stocks Going Up While Earnings Go Down?

 
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The primary driver of stock prices is supposedly earnings, right?  So how is it that earnings as a percentage of GDP have been falling since a peak in late 2014, and yet the major averages like the DJIA and SP500 are up 60% since then?

This week’s chart looks at some data which is buried deep within the Bureau of Economic Analysis’ report on National Income and Product Accounts.  You can find it at https://apps.bea.gov/iTable/iTable.cfm?reqid=19&step=2, then go to table 1.10, line 15.  Like... Read More

Small Cap Underperformance Is Not Over

 
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Small cap stocks have been underperforming large ones since mid-2018, and this underperformance should continue until the end of 2020. 

This week’s chart shows a relative strength line (green) for the Russell 2000 Index versus the Russell 1000.  It is a very simple calculation, dividing the R2’s index value by the R1’s.  When the line is rising, that means small caps are outperforming on a relative basis.  That outperformance can mean going up faster, or going down more slowly.  If you are... Read More

SPY Number of Shares Outstanding Continuing to Rise

 
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Note: This article previously appeared in the Jan. 14, 2020 issue of our Daily Edition. The charts are updated through Jan. 16’s data.

This week’s chart shows an interesting representation of bullish trader sentiment. The number of SPY shares outstanding is above its upper 50-1 Bollinger Band, and continuing to rise. 

Check out the other instances when this indicator has gone above that upper 50-1 band. You will notice that all of them in this chart except one were associated with... Read More

VIX Is Not Confirming Higher Prices

 
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The major averages are ignoring missile strikes, oil market turmoil, and excessively bullish sentiment, keeping prices marching higher in 2020.  But we have a major bearish divergence now in the VIX Index, which is NOT making lower lows to confirm those higher price highs.

The VIX Index made its lowest closing low for this price uptrend back on Nov. 26, at 11.54.  Since then, it has been making a succession of higher lows, even though prices have continued higher.  That sort of bearish... Read More

Fed Funds COT Leading Indication

 
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The efforts of the Federal Reserve to inject extra liquidity into the banking system over the past 2 months have helped to fuel the year-end (2019) rally.  Questions remain about how long the Fed may choose to keep up that effort, and whether the Fed has enough ink in the printing presses to overcome other market forces. 

And with all of the world contemplating the implications of the airstrike which killed the Iranian terrorist leader Qassem Soleimani, while at the same time repeating the... Read More

Gold COT Data Call for More of a Drop

 
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Gold prices are seeing a Christmas week pop, getting all of the gold bugs excited again.  But the smart money “commercial” traders of gold futures have a different vision of the future. 

Every Friday, the Commodity Futures Trading Commission (CFTC) publishes its Commitment of Traders (COT) Report, detailing the numbers of futures contracts held by different groups of traders.  They break it down into the commercial, non-commercial, and non-reportable traders.  Commercial traders are ones... Read More

 
Daily Timing Chart

 

02/14/2020 IssuesVolume(000s)
McC OSC 16.193 -19961
Sum Index 2994.519 1114662

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.