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Lumber’s Pullback is a Message for Real Estate

 
weekly Chart In Focus

Lumber futures prices peaked at $1,670 per 1,000 board feet back on May 7, 2021.  This is relevant because lumber prices tend to lead a lot of housing related data series by about a year. 

This week’s chart looks at the Case-Shiller U.S. National Home Price Index, which is a measure of the changes in average U.S. home values.  That is a tough data series to compute, because they have to use home sales to figure out what homes are worth, and the buying and selling of houses is subject to a... Read More

Investors Intelligence Data at Bearish Extreme

 
weekly Chart In Focus

When prices go down, people turn more bearish.  It is a natural human phenomenon, and it is still working during the current price decline.  The useful aspect of this is that when you see an extreme reading for a sentiment indicator, it is a sign that a bottom is at hand for prices.

This week’s survey data from the folks at Investors Intelligence showed a big jump in the percentage of investment advisors and newsletter writers they track who are being tallied as bearish, up to 40.8% now. ... Read More

The Bad Things That QT3 Will Bring

 
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The Federal Reserve announced on May 4, 2022 that it would start to reduce its holdings of Treasury securities and mortgage-backed securities (MBS) beginning on June 1, 2022.  Their plan is to sell off $30 billion of Treasuries and $17.5 billion of MBS every month from June through August.  Then in September they plan to ramp up to double those amounts every month. 
 

This will not be bullish at all for the stock market, based on our collective past experience with instances when the Fed... Read More

Dollar’s 8-year Cycle

 
weekly Chart In Focus

The US Dollar Index is climbing up to its highest levels now since 2002, which is getting a lot of currency traders excited.  U.S. manufacturers are a lot less excited, because a more valuable dollar makes it harder to sell products overseas.

This rise in the dollar is arriving despite the Fed being behind the curve on getting short term interest rates up to where they should be.  Low interest rates mean you get less return for keeping your wealth parked in dollars.  But everything is... Read More

Edson Gould’s Daily Point Index

 
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I have spent the past week going through old records, books, and other materials with my father Sherman McClellan, and we came across some promotional materials from the late Edson Gould’s Findings & Forecasts newsletter service.  It included descriptions of some of the indicators that Gould used, including ones that he created himself.  And that is where this week’s chart comes in.

Gould’s Daily Point Index was a rather simple indicator in construction.  It looked at whether the DJIA was... Read More

Multiyear Records for AAII Survey

 
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The American Association of Individual Investors (www.aaii.com) surveys its members every week to see if they are bullish, bearish, or neutral.  This week’s data, released on Thursday, April 14, 2022, showed the most negative bull-bear spread since April 2013.  The last time we saw negative sentiment like this in the AAII survey was in the summer of 2020, as investors were still worried about the Covid Crash that had unfolded in March 2020.  That worry helped to fuel a long bull market.  And... Read More

T-Bond Yields Following Gold’s Footsteps

 
weekly Chart In Focus

Inflation worries are finally getting the attention of investors, and of the Fed, and that has long term rates finally starting to climb.  It is weird for anyone who lived in the 1970s and 1980s to see an inflation rate approaching 8%, and long term T-Bond yields are still at 2.6%, and think that this is normal.  But at least bond yields are moving.

The small amount of the rise in bond yields is a curiosity, but the timing of it is not.  Those who regularly read our McClellan Market Report... Read More

 
Daily Timing Chart

 

05/23/2022 IssuesVolume(000s)
McC OSC 76.788 107652
Sum Index -1769.650 -2493133

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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.