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Traders Chase QQQ, “The Only Thing Working”

 
weekly Chart In Focus

The stock market rally went into pause mode in June, or at least that is the case as measured by the SP500’s behavior.  But traders are still piling into the tech stocks which dominate the Nasdaq 100 Index.  The operative logic is to chase what is working, for as long as it is working.  And that logic is working at the moment.

The chase into the big tech stocks has pulled investors into QQQ, the big Nasdaq 100 ETF.  That has pushed up the number of shares outstanding in QQQ to a multiyear... Read More

Crude Oil 10-Year Lead Update

 
weekly Chart In Focus

Given the wild price action this year in both the stock and oil markets, I figured it was time to provide an updated of crude oil’s 10-year leading indication for stock prices.

I first discovered this relationship back in 2008, when I looked at a log-scaled long term chart of crude oil prices and noticed that it looked an awful lot like the chart of the DJIA.  So I put the two on a chart together, but was not really satisfied with the way that the pattern details lined up.  After some... Read More

Copper/Gold Ratio

 
weekly Chart In Focus

I love intermarket relationships, and especially ones which can give useful insights.  This week’s chart looks at the ratio of copper prices to gold prices, and compares that to the 10-year T-Note yield.

The first interesting point to raise about this comparison is that I am using just a single Y-axis.  Normally a comparison of two data series will merit putting them on separate Y-axes.  I did multiply the copper/gold ratio by 1000 to bring it into the same realm as the 10-year yield, and... Read More

Rogue Wave Follow Up

 
weekly Chart In Focus

Back on March 19, I wrote here about “Stock Market Showing Another Example of ‘Rogue Wave’ Behavior”.  This week’s chart updates that same chart from the article 3 months ago.  The only change is that 3 more months’ price data have been added.

In an oceanic rogue wave, the huge wave “borrows” energy from the adjacent waves, dwarfing the size of the surrounding chop.  One important feature of oceanic rogue waves is that the height of the crest above sea level is matched by the depth of the... Read More

Non-Divergences Are Better Than Divergences

 
weekly Chart In Focus

Chartists love to go looking for divergences of all types, because they can tell us ahead of time that a reversal for prices is coming.  That can be fun information to get.

But divergences are problematic by nature.  They can last for varying amounts of time before they finally “matter”.  And sometimes they can get rehabilitated, with the divergent lower high being eclipsed by subsequent action.  So just because you or I see a divergence in an indicator, that is no guarantee that it has to... Read More

Unemployment Is Not “Good”, But It Is Bullish

 
weekly Chart In Focus

The officially stated rate of U.S. unemployment in April 2020 was 14.7%, the highest since the Great Depression, when the data were not as rigorously tabulated compared to these days.  Regardless of whether the 14.7% number is exactly correct (it isn’t), it is still a high number.  And May’s number may be higher still when it gets announced on June 5. 

That is a horrible development for our country, because our GDP misses out on the economic contributions of those who are not working. And... Read More

Higher High for HY Bond A-D Line

 
weekly Chart In Focus

Stock prices are doing their best impression of a V-bottom rebound, even if it is a somewhat lopsided V shape.  For much of this rebound, it has been possible to argue that this is “just a bear market rally”.  The higher that prices go, the harder it is for adherents to stick by that assertion. 

The big worry is over whether the Fed can throw enough liquidity at the financial markets to overwhelm the economic damage from the Covid Crash.  This week’s chart says that the Fed is prevailing at... Read More

Gold’s Choppiness Index

 
weekly Chart In Focus

The 14-day Choppiness Index for gold prices is up to a really high level.  The message of such a reading is that a new trending move should commence, but it does not tell us in which direction.

The Choppiness Index was created by Australian commodities trader E.W. Driess, as a way to quantify how linear (or not) the recent trend has been.  It takes into account the size of the recent daily price ranges, as well has how far prices have moved over the lookback period.  Here is the formula, in... Read More

 
Daily Timing Chart

 

07/10/2020 IssuesVolume(000s)
McC OSC -30.338 -23085
Sum Index 2947.126 3483708

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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.