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Top Advisors Corner

Tom McClellan: When Underperformance Reaches an Extreme

by Tom McClellan

When small-cap stocks are outperforming on a relative basis, that is usually a bullish sign for the overall stock market. And small cap underperformance is usually a bad sign. This principle works because small-cap stocks tend to be more sensitive to liquidity conditions, either good or bad. So, when there is enough money around to lift the small caps, that means there is enough money to lift everything. This week’s lead chart shows a very simple indicator, the relative strength ratio for the Russell 2000 vs. its big-cap brother, the Russell 1000 Index. It is Read More 

Top Advisors Corner

Tim Ord: The Ord Oracle June 11, 2019

by Tim Ord

SPX Monitoring purposes: Sold long SPX 6/7/19 at 2873.33= gain 4.41%; long 5/31/19 & 2752.06. Monitoring purposes GOLD: Long GDX on 1/29/19 at 21.96. Long Term Trend SPX monitor purposes: Sold long SPX on 5/6/19 at 2932.61= gain 5.96%:  Yesterday, we said that “This is the week before expiration week, which commonly has whipsaws, and next week is option expiration week, which normally has a bullish bias. Today marks five days up in a row, which is bearish short term but bullish longer term. When the market is up 5 days in a row, the market is higher 8 days out Read More 

Top Advisors Corner

Tom McClellan: High Yield Bonds Back to Bullish Mode

by Tom McClellan

The month of May 2019 gave us a scary-feeling selloff, as tariff worries gripped investors’ hearts. But it also showed that liquidity is not really in trouble, and now we have an affirmative sign that the bulls are back in charge.  High yield bonds, sometimes known as “junk bonds,” trade more like stocks than like Treasury bonds. They have proven to be ultra-sensitive to liquidity conditions, whether positive or negative, and are really useful canaries in the stock market’s coal mine. At the April 30, 2019 top for the S&P 500, we did not see a Read More 

Top Advisors Corner

Tim Ord: The Ord Oracle June 4, 2019

by Tim Ord

SPX Monitoring purposes: Long SPX 5/31/19 at 2752.06. Monitoring purposes GOLD: Long GDX on 1/29/19 at 21.96. Long Term Trend SPX monitor purposes: Sold long SPX on 5/6/19 at 2932.61= gain 5.96% We updated this chart from yesterday. The second window up from the bottom is the SPY/VIX ratio. Near lows in the SPY, the SPY/VIX ratio will trend sideways, if not turn up. Yesterday the SPY/VIX ratio at least turned sideways, a bullish sign, and today it rallied. On Friday, the TRIN closed at 1.21 and the Ticks closed at -97, a short-term bullish combination. This Read More 

Top Advisors Corner

Tom McClellan: Fosback Absolute Breadth, An Old Indicator That is Still Useful

by Tom McClellan

Years ago, market analyst Norm Fosback came up with his 21-day Absolute Breadth Ratio, which looks at the absolute value of the daily Advance-Decline (A-D) difference and normalizes it by dividing by the sum of Advances plus Declines (A+D). He also then smoothed those daily numbers with a 21-day simple moving average. Bigger daily breadth readings, regardless of which direction they are going, are a sign of chaos associated with important price bottoms. Quietness is a feature of price tops, showing up as lower readings for this indicator.  In this Read More 

Top Advisors Corner

Tim Ord: The Ord Oracle May 28, 2019

by Tim Ord

SPX Monitoring purposes: Neutral Monitoring purposes GOLD: Long GDX on 1/29/19 at 21.96. Long Term Trend SPX monitor purposes: Sold long SPX on 5/6/19 at 2932.61= gain 5.96%. We don’t have it shown, but the “3-day average of the Equity Put/Call ratio” stands at .76 and in bullish levels.  The “3-day average Equity Put/Call” carries more importance than the 1-day average and suggests a low in the market is near. The second window up from the bottom is the SPY/VIX ratio. When this ratio is rising, then SPY is outperforming VIX, which is usually what happens in a Read More 

Top Advisors Corner

Tom McClellan: Baltic Dry Index Leads Stock Prices

by Tom McClellan

The Baltic Dry Index (BDI) measures shipping rates on a type of cargo ship which hauls “dry” cargo, such as iron ore, coal, etc., as opposed to tankers hauling oil or container ships hauling big steel boxes of stuff. The BDI has long been considered an important leading economic indicator, because if steel companies are going to slow down their production of steel, they are likely to slow down their shipping of the ores they need to make the steel.  Starting a couple of years ago, the BDI also became useful as a leading indicator for the stock market. Its Read More 

Top Advisors Corner

Tim Ord: The Ord Oracle May 21, 2019

by Tim Ord

SPX Monitoring purposes: Neutral Monitoring purposes GOLD: Long GDX on 1/29/19 at 21.96. Long Term Trend SPX monitor purposes: Sold long SPX on 5/6/19 at 2932.61= gain 5.96% Tomorrow, the Fed will release the minutes from the last FOMC meeting and market is up 68% of the time on the release. The next trading day (Thursday) market is up only 48% of the time. It does appear a worthwhile low formed on May 13 ( the day of the TRIN 1.85 and Tick -129 readings). A minor pullback could form on Thursday and/or Friday and test Monday’s low near the 2830 SPX range. The VIX Read More 

Top Advisors Corner

Tom McClellan: On the Fickle Correlation Between Stocks and Oil Prices

by Tom McClellan

The sharp decline in crude oil prices in Q4 of 2018 helped to take down the stock market in sympathy. And then the rapid rebound by oil has coincided with a robust rebound in stock prices, with strong breadth numbers to help confirm the stock market’s strength in 2019. But if you think you understand the relationship between stock prices and oil prices, then you have not looked at enough data yet.  Oil and stocks have been in a strong positive correlation since around the beginning of August 2018. But, for the 5 months prior to that starting point, they were in an Read More 

Top Advisors Corner

Tim Ord: The Ord Oracle May 14, 2019

by Tim Ord

SPX Monitoring purposes: Sold long SPX on 5/13/19 at 2811.87 = loss 2.05%; Long 5/9/19 at 2870.72. Monitoring purposes GOLD: Long GDX on 1/29/19 at 21.96. Long Term Trend SPX monitor purposes: Sold long SPX on 5/6/19 at 2932.61= gain 5.96%. Yesterday’s low had higher volume than the day before, suggesting yesterday’s low needs testing on lighter volume before a final low is in. Today’s rally tested yesterday’s high on lighter volume, which implies resistance and a pullback is in order. The “3-day TRIN” did reach in bullish levels yesterday. Support comes in Read More 

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