After bottoming in 2003 after the 2000 tech wreck, the technology sector (QQQ) has been the place to be when investing in US equities. As you can see in the ratio chart of the technology index, QQQ, to the broader sp500 index, it has stayed in an upward rising channel the entire time. From that bottom (17 years ago), technology has outperformed the sp500 by more than 130%. There is nothing in the chart, as of now, to say this is changing. If you didn’t care about diversification and there was a plan on how to manage, it’s ..read more

I had a blog post all ready to go on Friday for release on Monday and then I got the latest from Tom McClellan over the weekend and had to bury mine. I repost his studies often because not only are they interesting but more importantly for investors, they are based upon actual data (rather than opinion) and actionable. Here is his latest and relevant missive on the presidential cycle and US stock market., something that has historically provided a signifcant edge ….  ========================================= Presidential Cycle Pattern and an Election Year ..read more

After peaking in December of 2017, camping world holding stock, CWH, fell almost 85%, bottoming in September of this year signaled by positive momentum divergence. Since that time, the strong bounce off the bottom hit resistance at exactly a point we would expect as it failed to move higher many times in the past. In addition, momentum has moved from an oversold to overbought condition which needed to be unwound. The recent 14-day consolidation has allowed it to do just that. Notice volume in the bottom pane has shifted from institutional distribution (selling) to accumulation. When the boys w ..read more

Since 2006 the price of gold has tracked the inverse of US 10-year rates (10-year treasury prices) with uncanny accuracy as you can see in the chart below. A 90+% correlation of two unrelated investments for an extended period of time is rare. As an investor, if this were to hold, and you strongly believed US interest rates were going to rise, a good hedge to protect yourself from falling rates would be to buy gold. Of course, the opposite is true too. Rising 10-year rates/falling treasury prices could be offset by shorting gold ..read more

Looking at the year-to-date flow of funds into different investment types should make one scratch their head in wonder. How can stocks be having the bang-up year they are having when investors are fleeing for safe havens? One simple and probably accurate explanation is investors, on the whole, get it wrong way more than they get it right. The good news is this has the potential for setting up a continuation into next year. Why? With so much money moved into fixed income investments, as stocks continue to rise, FOMO (the fea ..read more

The recent analog chart put together by Fidelity and Factset is interesting. As you can see below, they plotted 27 months of stock market performance data, normalized it from 4 different time periods, ’94, ’96, ’11 and current (black). What falls out is an analog. A tight correlation between price action from the bottom of each cyclical adjustment bottom. With the black line being where we are today, it implies investors should expect smooth sailing for stocks through September of next year. Why September? I have no clue on what or why the stopped the data from there. My guess is the analog fe ..read more

Presenting this CISCO chart without commentary for your interpretation. What are your thoughts ..read more

Other than a few intermittent spurts, US small cap stock performance has significantly under-performed the broader market SP500 index for more than a year and a half. In fact, it has lagged by more than 14% over this short time. Unlike the broader market and other sectors (i.e. technology) small caps have not yet broken out to new highs. Small cap strength is typically a pervasive element in a strong stock bull market. Looking at the small cap index chart, IWM, below, we can see it is stuck in a sideways, consolidative rectangle pattern. Each time it has reached the upper boundary, it has foun ..read more

Leave it to Tom McClellan to look at how stocks react to the tax rate (as a percentage of GDP). I find this data absolutely fascinating. The good news is, at least as of right now, if stocks are to fall, it won’t be because tax rates are too high. Take a look at Tom’s most recent study below. For those interested all his studies can be found (free) at www.msoscillator.com. Treasury Department Is Not Biting Too Hard  The good news for the stock market bulls is that the federal government is not taking too big of a bite out of Americans’ incomes.  The latest data from the Treasury Department sho ..read more

With one of the downsides of owning individual stocks having been recently eliminated (trading costs), the biggest one (earnings surprises) becomes a bigger concern. In the early stages of bull market (think 2009), news and earnings tend to have positive impact on stock prices. Regardless what is reported. Why? Because investors have very low expectations and, as such, even bad news turns out to be good since it is not a surprise. As you would expect, the opposite is true too. As an aging bull lingers, expectations become increasingly higher (priced to perfection) and even good news often turn ..read more