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Top Advisors Corner

Tom McClellan: Treasury-Bund Spread Just Gave Stocks New Life

by Tom McClellan

 Since the early 1990s, there has been a pretty good correlation between the movements of the DJIA and the spread between the 10-year U.S. Treasury yield and the equivalent yield for German sovereign debt.  The German bonds are commonly referred to as “bunds”, shorthand for the German word “bundes”, meaning federal.  This Treasury-Bund spread also has the interesting property of giving us an early warning of major secular tops in the U.S. stock market.  When it rises up to a very high level, and then makes a divergent top relative to the DJIA, that is a warning sign Read More 

Top Advisors Corner

Why Small Cap Stocks Are Doing Well And How You Can Participate

by Mary Ellen McGonagle

Despite the healthy move in some of these stocks already, there are several compelling reasons why these stocks deserve some attention. With the Russell 2000 hitting another new high today, small cap stocks continue to outdistance larger cap stocks. Year to date, these smaller names are now up over 10% vs the S&P 500’s return of 3.8%. There are several sound reasons why these Small Cap stocks are outpacing the broader markets as well as one very important main reason that points to a continued outperformance of these stocks going forward. Read More 

Top Advisors Corner

Tim Ord: The Ord Oracle June 13, 2018

by Tim Ord

SPX Monitoring purposes; Neutral. Monitoring purposes GOLD: neutral Long Term Trend SPX monitor purposes: Sold 6/7/18 at 2770.37=gain .76%;Long SPX 3/14/18 at 2749.48. We have updated this chart form yesterday. The 3 day, 10 day and 21 day moving average of the Equity Put/Call ratio are in bearish levels at the same time and increases the chance the market can stall in this price range.  In each case the market stalled (except the big run up in January).  This study suggests upside is limited.  There is evidence that a pull back could materialize near the 2700 level on Read More 

Top Advisors Corner

Tom McClellan: Too Much Love for QQQ

by Tom McClellan

 The FANG stocks have been leading the market higher in 2018, and a lot of traders are choosing to tag along on that trade by buying into QQQ, the ETF which tracks the Nasdaq 100 Index (NDX).  As more traders buy into QQQ, the sponsoring firm (Powershares, part of Invesco) issues more shares in order to keep the share price as close as possible to the net asset value. This week’s chart shows how the number of QQQ shares outstanding varies over time.  Not surprisingly, it goes up and down in sympathy with price movements.  There is nothing like an uptrend to Read More 

Top Advisors Corner

Tim Ord: The Ord Oracle June 7, 2018

by Tim Ord

SPX Monitoring purposes; Neutral. Monitoring purposes GOLD: neutral Long Term Trend SPX monitor purposes: Long SPX 3/14/18 at 2749.48. We have updated this chart from yesterday. The middle window is the VXST/VIX (Short term VIX/Volatility index).  It has been a bearish short term sign when the VXST outperforms the VIX (rising ratio).  The SPY traded above its previous high and the VXST/VIX ratio made a higher low suggesting a short term pull back is possible.  Also this is the week before option expiration week which can produce whipsaws.  Next Wednesday (June 13) Read More 

Top Advisors Corner

Dealing with Dollar Strength

by David Keller

As the US Dollar continues to strengthen, it’s worth revisiting the bullish thesis to evaluate potential future paths.  Overall, the Dollar remains in a positive configuration with further upside in the UUP to around 25.35. Back in late April, we reviewed the breakout in the Dollar using this chart of the Bullish Dollar ETF (UUP). The trendline breakout lined up with a bullish divergence from the weekly MACD and a confirmation from the weekly RSI.  The weekly Fibonacci retracement gave us an upside objective of around 24.50. We then looked at the daily Read More 

Top Advisors Corner

Tom McClellan: A Fresh Look at Lumber and Housing Stocks

by Tom McClellan

  For a few years now, I have been employing lumber prices as a leading indicator for what the homebuilding sector of the stock market would do, and it has worked pretty well.  But lately the correlation is broken, with housing stock prices falling even as lumber said they were supposed to continue trending higher.  So it’s time to reevaluate the hypothesis about lumber giving a leading indication. In the past, I have found that a lag time of just over a year worked to show how the HGX’s movements tended to match the earlier ones in lumber.  That Read More 

Top Advisors Corner

Tom McClellan: What Happened to the Presidential Cycle?

by Tom McClellan

If this were a “normal” 2nd year of a presidential term, we would now be in a corrective period due to last until just before the mid-term elections.  But as many in the press have noted, we do not have a “normal” presidency, and the market is not tracing out a perfect normal pattern.  Years ago, I first constructed a Presidential Cycle Pattern by averaging together multiple years’ worth of data on the SP500.  One difference I chose to make in this process, versus the work of others, is that I started each year on the anniversary of the November federal elections.  Read More 

Top Advisors Corner

Tom McClellan: Bitcoin Still Blazing Trail for Stocks

by Tom McClellan

 Back in January, I introduced readers to the revelation that all throughout 2017, the DJIA had been following in the footsteps of Bitcoin prices, with a lag time of about 8 weeks (56 calendar days).  And it continues working even now, albeit with a slight adjustment. Why would this relationship work?  My answer is that there are cycles of human emotion which affect our collective attraction to and repulsion from speculative investments like the stock market.  It appears that those same cycles of trader emotion are at work on Bitcoin traders, who are feeling those Read More 

Top Advisors Corner

Tom McClellan: Gold/Silver Ratio

by Tom McClellan

 The ratio of gold prices versus silver prices is now up to the type of high reading that in the past 2 decades has marked an important low for both gold and silver prices.  The value of anything is always and in every case a ratio.  Most often the units are expressed as dollars per ounce, dollars per bushel, dollars per share, etc.  But expressing the price of an ounce of gold as being equivalent to 80 ounces of silver is perfectly legitimate.  We can understand the implications of the dollar price of something being expensive or cheap; it takes a little bit Read More 

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