Pull the trigger with confidence.

Back in December 2021, fears about the debut of the Omicron Variant (yes that was just 6 weeks ago) caused a sharp stock market selloff and an oversold condition on a lot of indicators.  I wrote about one of them at this link, and it is worth another look now with this week’s chart.

To review briefly, the 10% Trend of the daily Advance-Decline (A-D) difference is one of the components of calculating the McClellan Oscillator.  See this link.  We still employ the originalist terminology first... Read More

The Baltic Dry Index (BDI) peaked back on October 7, 2021, and has fallen by 72% since then as worldwide demand has fallen rapidly for cargo ships to haul iron ore and other “dry” cargos.  This has a bearish implication for stock prices, as illustrated in this week’s chart.  The trick is that the plot of the BDI is shifted forward by just over a month to reveal how its movements get repeated by the SP500.

I don’t really know why this relationship works, nor why 24 trading days gets the best... Read More

I used to believe as others do that the “proper” Advance-Decline (A-D) data come from the “common” stocks.  After all, they are the real stocks, so they should know better what the stock market is doing.  I stopped believing that once I looked at the data.

Among the supposed contaminants that ruin the purity of the composite A-D data are closed end funds (CEFs) which own various types of bonds (e.g. municipal, high grade corporate, etc.).  These issues trade on the NYSE just as though they... Read More

A bullish signal is bullish, except when it’s not.

This week’s chart looks at a McClellan A-D Oscillator calculated using advances and declines for the stocks which make up the Nasdaq 100 Index.  Because it has fewer issues than the overall NYSE or Nasdaq markets, the numerical values for this McClellan Oscillator are necessarily going to be lower.  That is why looking at a chart is essential to make sense of any day’s particular reading.

When this McClellan A-D Oscillator gets up to... Read More

As 2021 winds down, gold prices are starting to perk up again a little bit.  But this very slight rise is still not having any effect on the public’s willingness to own gold bullion ETFs. 

This week’s chart shows the combined assets of GLD and IAU, the two largest of the ETFs which hold gold bullion to back their shares.  Assets in these two ETFs tend to rise and fall in sympathy with gold prices, and this makes sense.  There is nothing like rising prices to get more people excited and... Read More

People think that the Fed controls inflation, and they think that because they were taught to think that while getting expensive educations at institutions of higher learning.  And besides, everyone says so, and so it must be true.

But what if I could model the movements of inflation rates using no financial or economic data at all as inputs?  What would that do to your own personal confidence about the premise of the Fed controlling inflation?

This is the quandary I am going to confront... Read More

The Federal Reserve Open Market Committee (FOMC) is still stuck at 0-0.25% as its target for the Fed Funds rate.  This is the interest rate at which commercial banks lend each other money overnight to balance their deposits and loans.  The New York Federal Reserve Bank is tasked with the mission of intervening with more or fewer reserves in order to nudge the effective Fed Funds rate closer to the target rate every night. 

Over the past few decades, we have found that the 2-year T-Note... Read More