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What Happened to the Eurodollar COT Model?

 
weekly Chart In Focus

One of my favorite predictive models had me looking for a decent selloff in the summer of 2018, but the U.S. stock market decided not to participate.  So what happened?

The model in this week’s chart contains data from the weekly Commitment of Traders (COT) Report, published by the CFTC.  This data is on the eurodollar futures contract, the most liquid and widely traded of all futures contracts.  I should emphasize that in this context, the term “eurodollar” is not a currency futures... Read More

DJIA/Gold Ratio

 
weekly Chart In Focus

Every chart of price data is a depiction of a ratio.  If you look at a chart of your favorite stock, what you are really looking at is the ratio of the value of your stock to the value of the dollar, since stock prices are quoted in dollars.  AAPL recently was at 226 dollars per share.  Gold recently is at 1200 dollars per ounce.  Every price is a ratio. 

But you don’t have to have currency in a ratio.  The value of the DJIA is an approximation of dollars per something; I won’t discuss the... Read More

Deja Voodoo, 1994 Edition

 
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In the election of 1992 there was an insurgent candidate, who did not win a majority of the popular vote, but who took the White House and set about reorganizing the government in a manner more to his liking.  The first two years of his term in office were marked by numerous scandals, and by a stock market which saw a scary dip in the 2nd year which eventually resolved itself into a strong uptrend during the 3rd year of his presidential term.  At that time, the Federal Reserve was commencing... Read More

Architecture Billings Index Flashes Warning on Economy

 
weekly Chart In Focus

The news of a 4.1% rate of GDP growth in Q2 of 2018 got the financial media excited.  4.1% was the rate of change compared to the prior quarter.  When we use a 1-year lookback, it is not quite that strong of a number, but still good news in terms of what it does to getting more people working and paying taxes. 

The troubling news this week is that the latest data from the American Institute of Architects, http://www.aia.org, shows that their Architecture Billing Inquiries Index is headed... Read More

AAPL’s Quarterly Price Pattern

 
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We normally think of seasonality as being an annual phenomenon.  But it can appear in other ways, such as the 4-year Presidential Cycle Pattern, and quarterly, as with this week’s chart of the share price of Apple Corp (Nasdaq:AAPL).

The price of AAPL stock got everyone excited on August 1st after the company announced strong earnings.  Prices shot up to a new high, and the company’s market capitalization shot up above $1 trillion.  It is the first U.S. company to reach that threshold, and... Read More

How Seasonality Has Changed

 
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We all know about the factor of seasonality, and especially about how it is distilled into the bit of TV news wisdom, “Sell In May and go away”.  That phrase has been around for decades, originally supposedly referring to traders in England who would “Sell in May and go away, and come back on St. Leger’s Day”.  This referred to the custom of aristocrats, merchants, and bankers who would skip town and go to the country during the hot months, returning for the St. Leger’s Stakes, a horse race... Read More

Investors Intelligence Bull-Bear Spread

 
weekly Chart In Focus

We saw a really high degree of bullishness back in January 2018, when the U.S. stock market was making a big blowoff top.  Since then, the major averages have struggled to move higher, and so has bullish sentiment.  But in July 2018, we saw the Investors Intelligence Bull-Bear Spread move up again above its upper 50-1 Bollinger Band (BBand).

That is a clue that sentiment is getting too far extended, but it is not enough by itself to say that the market is all done going up.  What is needed... Read More