Pull the trigger with confidence.

Indicators like the McClellan Summation Index can tell us a lot by the level they get to.  But they can also tell us a lot based on the patterns they show, or in some cases the patterns they don’t show. 

A “smooth” move in the Summation Index is one that is nearly linear, and it conveys a message about strength for the direction of the move.  So in the case of this week’s chart, we see smooth sustained up moves.

We also see some bumpy down moves.  Bumpiness is an indication of weakness... Read More

It is now officially April, and in past posts I have noted that the leading indication message from crude has called for a stock market top due in April 2021.  This should be the 10-year echo of the monthly closing price top in oil prices in April 2011.  But what exactly does it mean to expect an April 2021 major stock market price top?

Looking closer, we can see that “10 years” does not always mean 10.0000000 years.  The 10-year lag is not always perfectly accurate.  Sometimes the turns... Read More

Congress and the White House seem intent upon spending a lot more of our money.  In the past 12 months ending in February 2021, the federal government has spent $2 for every $1 it took in.  That has boosted the deficit up to an amount never seen before, neither in nominal terms nor as a percentage of GDP.

Spending money that the government does not have is assuredly bullish for the stock market.  And it is potentially inflationary, which should presumably be a bullish factor for gold prices... Read More

Gobs of breadth is a good thing.  When there is enough money sloshing around the stock market to lift all boats, that means there is a rising tide, which is a condition that tends to persist. 

A month ago, there was a tiny little divergence apparent between the DJIA and the NYSE’s A-D Line.  Tiny divergences tend to only bring on tiny corrections.  It takes a much grander divergence than that, most of the time, to usher in a big bear market.

Still, the tiny divergence was a concern, but... Read More

The relationship between Bitcoin and the stock market is an extremely curious one.  Stock prices are supposedly backed by the future earnings capacity of the company.  Bitcoin’s value is not really backed by anything.  Its value is whatever somebody thinks the value is.  And yet the price of Bitcoin and the level of the SP500 do indeed have a relationship. 

The frustrating thing is that it is assuredly an imperfect relationship.  And it has been a changing relationship over time.  Back in... Read More

Liquidity is bullish for the stock market.  It is even more bullish for small cap stocks and other types of issues which are more sensitive to liquidity.  That is why indicators like the A-D Line are so useful for gauging the health of the liquidity pool.  There are more small cap stocks than large ones, and so they have a bigger voice in the A-D Line.  When the A-D Line and small cap stocks are doing well, the overall market tends to be very healthy, because liquidity is plentiful.

The Fed... Read More