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Top Advisors Corner

Tom McClellan: Deficits and Gold

by Tom McClellan

 If you are a gold investor, then the one thing you want most is rising deficits.  Luckily for you, Congress appears to have granted just what you want. This week’s chart compares the trailing 12-month federal deficit (as a percentage of GDP) to gold prices.  The correlation is not perfect, but it is pretty good over time.  The implication is that rising deficits should be bullish for gold prices. That certainly was the case during the 2000s, following the supposed surpluses of the late 1990s.  Those were not actual surpluses, as the total Read More 

Top Advisors Corner

David Keller: Dialing Up the Dollar

by David Keller

After spending the last 16 months in a fairly orderly downtrend, the US Dollar is showing signs of a short-term reversal.  After putting in a higher low in late March, the greenback may be poised for a return to the highs of late 2017. While there are many macro factors that can influence the value of the dollar, an independent technical review of the chart can allow you to have a more informed discussion of what the future may hold. Here we’ll review the weekly chart of the UUP (bullish dollar ETF) for a long-term perspective on the recent breakout, then we’ll focus on a short-term Read More 

Top Advisors Corner

Tom McClellan: 3 Months Into Tax Relief, How Is It Going?

by Tom McClellan

 There is a very strong seasonal pattern in the way that tax receipts come into the federal government.  The nice thing about that regularity is that it allows us to easily compare how the current year is doing versus past years. In this week’s chart, the black line represents the calendar year 2018 total federal receipts, as detailed in the Monthly Treasury Statement, or MTS.  What we find is that 2018’s receipts are running pretty similar to those of the past 4 years. This is an important point to note, because the big tax reform which was Read More 

Top Advisors Corner

Tom McClellan: Fed is Behind, But Still Screwing Up

by Tom McClellan

Make me Emperor for a day, and I would compel the FOMC to outsource interest rate policy to the bond market.  Why should we pay 12 experts, most with expensive Ivy League PhD degrees, to do what the bond market can do far more efficiently (and cheaply)? This week’s chart compares the 2-year T-Note yield to the stated Fed Funds target rate.  The FOMC has actually said that the target rate is 1.5% to 1.75%, so I’m splitting the difference by calling it 1.625%.  What this chart shows is that first, the two interest rates are very strongly correlated over time, which is as Read More 

Top Advisors Corner

Tom McClellan: Backmasking The DJIA's Price Pattern

by Tom McClellan

 The stock market is continuing to display a weird backwards rerun of its own behavior 9 years ago.  I wrote about this here back on Jan. 18, 2018, in a Chart In Focus article titled, “Ending How It Began (Parabolically)?”.  That was just a week before the stock market’s blowoff top.  So it is time for a review of how things have turned out since then.  Just so you understand what this week’s chart is showing, what I have done is taken the black-line plot of the DJIA, and rotated it around the Z-axis (perpendicular to the page) in Read More 

Top Advisors Corner

How To Prosper During These Volatile Markets - Three Keys To Keep You In The Game

by Mary Ellen McGonagle

It’s been a wild ride for investors over the last 2 months as the markets have gyrated on a regular basis.  In fact, the widely watched VIX – better known as the Volatility Index – has just posted its biggest quarterly rise since the 3rd quarter of 2011. During that time, there was a downgrade of U.S. credit as well as worries about Europe’s debt-crisis jitters. And while there are many possible reasons for this increase in volatility today, many professional traders think it’s here to stay – for a while anyway.  For those not familiar, the VIX reflects option traders’ Read More 

Top Advisors Corner

Tom McClellan: What Really Drives the Arms Index

by Tom McClellan

 Earlier this month, the technical analysis community mourned the passing of Richard Arms, the creator of the eponymous Arms Index.  You can read an obituary by Jonathan Arter here.  I met him a few years ago and had corresponded with him, and I can tell you that he was not only a brilliant chartist, he was also a really nice guy.  He was happy to share his insights with others.  The Arms Index is sometimes referred to as “TRIN”, short for TRading INdex.  TRIN was the old Reuters screen code, and it is the symbol many quote Read More 

Top Advisors Corner

David Keller: Taking the 200-Day Temperature

by David Keller

I show the 200-day moving average on about 90% of my charts.  I do so not because of its incredible predictive power, but more because it tells me the overall trend.  By smoothing out 200 days of closing prices, I can minimize the noise of the daily volatility and focus on the long-term trends. A brief review of the 200-day moving averages shows that while the S&P 500 has remained above this long-term barometer, many stocks and sectors have already broken down. The S&P 500 index tested its 200-day moving average in early February during the first downward Read More 

Top Advisors Corner

Tom McClellan: Crude Oil Swooping Up On Schedule

by Tom McClellan

 The movements of gold prices lead similar movements in crude oil about 20 months later.  So if you watch what gold has already done, you can see the script for what oil prices are going to do. It does not work perfectly; it is merely amazing, not perfect.  Crude oil prices had a brief swoon, dipping to $59/barrel in early February.  That matched a brief dip in gold prices 20 months earlier in May 2016.  Now oil prices are recovering, just as gold recovered to its July 2016 top.  But the recovery in oil prices should only be a brief one, as gold’s chart Read More 

Top Advisors Corner

Tom McClellan: High Grade Bond Summation Index Oversold

by Tom McClellan

March 14, 2018  The world was convinced that inflation was imminent, that bond yields were rising, and thus that investors ought to dump anything bond related.  The 10-year T-Note was assuredly headed north of 3%, people were going to stop taking out mortgages, companies were going to stop investing, and inflation was going to be the “new normal”.  But wait!  That sentiment appears to have been overdone, and bond prices got oversold.  We can measure the oversold condition of T-Bond prices in a large variety of ways, but this week’s chart Read More 

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