Top Advisors Corner

February 2015

Top Advisors Corner

Tom McClellan: 2-Year T-Note Shows Path For FOMC

by Tom McClellan

 I wrote back in 2011 that the Fed could do a lot better with interest rate policy if the FOMC would just outsource the decision making task to the bond market, specifically the 2-year T-Note yield.  The point is still the same, and the FOMC is still seemingly unaware. To review briefly, this week’s chart shows a comparison between the 2-year Treasury Note yield and the target rate for Fed Funds, which is set by the FOMC.  The NY Fed is then tasked with adding or withdrawing money available to loan to eligible depository institutions so that the “effective” rate of such Read More 

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Tim Ord: The Ord Oracle - February 25, 2015

by Tim Ord

Monitoring purposes SPX: Long SPX on 2/3/15 at 2050.03. Monitoring purposes GOLD: Gold ETF GLD long at 173.59 on 9/21/11 Long Term Trend monitor purposes: Flat  This chart looks at the short term picture for the SPY.  Normally these indicators on this chart will show bullish or bearish signs before a top or bottom is completed.   The top window is the McClellan Oscillator and reading above “0” is a bullish sign for the market and today’s reading came in at 68.85.  Next window down NYSE up volume with 5 period moving average and NYSE down volume with 5 period moving Read More 

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Jack Steiman: Same Old Story as Bears Accomplish Nothing

by Jack Steiman

The market two good reasons to sell a bit on Monday. First, there was the overbought condition on the Nasdaq 100, and second, there was caution ahead of Yellen's testimony before Congress on Tuesday and Wednesday.  That was enough to keep the buyers away for a day. The market made the usual attempts to blast up, but those were met with some selling back down, although, when all was said and done, the bears accomplished nothing. The Nasdaq 100 actually finished green a bit. The market just doesn't want to sell in front of Ms. Yellen, who they know will keep protecting it, even if she Read More 

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Gene Inger: The Inger Letter - February 23, 2015

by Gene Inger

Only The ECB / Greek deal - is actually more frozen than the ice storms the USA is dealing with this week. Ours will melt; Europe's only slightly defrosted as it simply 'kicks the can' down the road by 4 months. Why 4 instead of 6? It likely relates to a major debt maturity coming for Athens toward 6 months; so it makes sense for them to renegotiate or restructure before then, as credit markets wouldn't receive a rollover effort well if things don't get sorted-out. So as days evolves; existing euphoria may wane like that of Oscar nominees.   Read More 

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Fingraphs: Japan - Abenomics 3 is only a matter of time

by Jean-Francois Owczarczak

All eyes on Europe this week with the GREXIT bluffing drama reaching a climax.  More generally, Europe has been in the limelight since the beginning of the year: GREXIT, ECB Bond purchases, war in Ukraine, SNB’s surprise announcement.  Today, we  escape this mediatic buzz as we try to look ‘next to the box’, namely to Japan and Abenomics (or what was last year’s hot topic).  We believe this story could come back into the limelight over the next few months. All stories are interrelated anyway.  In our competitive global world, QE in Europe will certainly Read More 

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Martha Stokes: Entries and Exits

by Martha Stokes

Western Candlestick Patterns  Retail technical traders often struggle with determining when and how to enter a stock, how long to hold the stock, how to determine the gain potential, and when and how to exit a stock. Many times technical traders who have only learned basic Japanese candlestick patterns or basic technical patterns, miss good entry patterns or do not recognize Western Candlestick Entry Signals. An entry signal is not necessarily one candle or even 3 candles, it often times will be a group of candles. What happened before the pattern is just as important as the entry Read More 

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Tom McClellan: Architecture Billings Index Flashes Warning

by Tom McClellan

 The latest news from the American Institute of Architects (AIA) has some economists alarmed, because it shows a potential shrinkage in housing related activity.  The AIA publishes data based on surveys of member firms, known as Architecture Billings Indices, and their two main index products are the Billings Index and the Inquiries Index.  Billings represents actual work that gets billed to the customer, while Inquiries is a softer data set reflecting customers potentially generating new work. It is the actual Architecture Billings Index Read More 

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Tim Ord- The Ord Oracle- February 18, 2015

by Tim Ord

Monitoring purposes SPX: Long SPX on 2/3/15 at 2050.03. Monitoring purposes GOLD: Gold ETF GLD long at 173.59 on 9/21/11 Long Term Trend monitor purposes: Flat  Timers Digest recorded the Ord Oracle #6 in performance for 3 months updated February 13, 2015. The chart above looks at the short term picture for the SPY.  Normally these indicators on this chart will show bullish or bearish signs before a top or bottom is completed.   The top window is the McClellan Oscillator and reading above “0” are a bullish sign for the market and today’s reading came in at Read More 

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Gene Inger: The Inger Letter - February 17, 2015

by Gene Inger

Inquiring minds - in the days ahead, might start to wander away from what has been 'roses for bulls' and 'thorns for bears' ahead of Valentine's Day, instead contemplate why a quick run-up to new highs. (Details are mostly reserved.) The late surge was primarily overseas sovereign buying channeled through London. Unaware of that; traders talkied about progress on Ukraine or Greece/ECB; rather than the opposite. Given 'exchange rate' deterrence for most foreign buyers of U.S. assets; plus high foreign credit market buying last week; another explanation is likely.  Read More 

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Martha Stokes: Compression Pattern Indicator Analysis

by Martha Stokes

Quantity Indicators Allow For Early Entry All indicators have limitations, market conditions where the indicator fails or does not provide a true positive or negative pattern, or simply is unable to keep up with the speed of momentum price or volume activity.  Bollinger Bands® are no exception. Bollinger Bands and the various other indicators written by John Bollinger CFA, CMT are excellent indicators, however all indicators have times when they lag behind price. The stock charts in this article are of Boeing Co. (NYSE:BA), see chart example #1 below. Read More 

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Fingraphs: Confirming the upside break-out

by Jean-Francois Owczarczak

In our late December year end review, we gave the current cyclical upturn the benefit of the doubt.  We were looking for the following positive developments to confirm this stance: •    On the sectors front, early cycle movers really needed to reinstate their uptrend on a relative strength basis •    Internationally, non-US markets needed to show some pick-up (the world needed other successes next to the US) •    Cross asset, equities needed to outperform Long dated treasuries again See for reference the “Wrap-up Read More 

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Tom McClellan: Crude Oil Leads the Euro

by Tom McClellan

 There is information about the future of the euro, and it is hidden in plain sight, right in the chart of crude oil prices.   This week’s chart reveals that relationship, which is yet another example in a long series of what I call “liquidity wave” relationships.  That refers to the phenomenon of a price structure appearing in one market’s price plot, and then appearing again sometime later in another.  I liken it to an ocean wave appearing at the end of a pier, and then hitting the beach several seconds later.  If you can figure out what price series Read More 

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Tim Ord: The Ord Oracle - February 12, 2015

by Tim Ord

Monitoring purposes SPX: Long SPX on 2/3/15 at 2050.03. Monitoring purposes GOLD: Gold ETF GLD long at 173.59 on 9/21/11 Long Term Trend monitor purposes: Flat  The SPY/VIX ratio has help to pick turning points in the market by showing a positive divergence and lows (see March April 2014 low and January February 2015 low) and negative divergences  at highs (see July; September and December 2014 highs).   Today’s market action produced a higher high and the SPY/VIX ratio also made a higher high confirming the uptrend so far.   Volume is not great on this rally this Read More 

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Gene Inger: The Inger Letter - Feb 9, 2015

by Gene Inger

Market vulnerability - is actually elevated by virtue of not only higher levels (a further divorce from reality); by a renewal of overbought technical aspects; by a paucity of favorable earnings or 'policy' pronouncements ahead; but also by increased realization monetary policy is moving in the direction called for. To all that one can add the incalculable brewing geopolitical risks. (The Daily Briefing full report assesses handling near-term Ukrainian news.) To that add our review of the real implications of hardball between Greece and the ECB. The equity Read More 

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W.H.C Basetti - Mongoose and Cobra

by W.H.C. Bassetti

The top chart, as is obvious, is the present state of the naked mud wrestling contest.  Close your eyes and throw a dart, because there is no winning a contest of this sort -- except by not participating.  It does show the stops -- ignore them at your peril. We have been staring with fascination at the lower chart, like a mongoose staring at a cobra.  A while back in December we questioned the interpretation of the pattern (1,2,3,4,5)  as a broadening top.  (It seemed too ugly and asymmetrical to fit the concept.)  But maybe the cobra is right.  Maybe Read More 

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Fingraphs: How to deal with countertrends

by Jean-Francois Owczarczak

After many months of low activity, markets finally got going mid last year.  Was it the anticipation of an end to US QE, war in Ukraine, the Saudis dumping oil, Abenomics, the SNB’s surprise move, GREXIT or anticipation of ECB’s own QE?  It was probably a bit of all.  For sure, the last 6 months have seen large directional moves in many asset classes.  Over the last couple of weeks, some of these trends have started to correct.  We will take this opportunity to use our FinGraphs service to monitor two of these countertrend moves (EUR/USD and Brent Oil).  We Read More 

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Martha Stokes: Negative Divergences

by Martha Stokes

Shrinking Candlesticks and Falling Volume One of the more important Spatial Pattern Recognition Skills™ that technical traders need to be able to quickly identify, especially during a sideways price action is the negative divergence between Price and Volume. This is often the earliest warning signal technical traders can use to prepare ahead of time for a potential sudden collapse of price as High Frequency Traders HFTs suddenly move in to sell a stock short.  The candlestick chart example below has more than one negative divergence occurring at this time. First warning was the Read More 

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Tom McClellan: Pessimism Evident in QQQ Shares Outstanding

by Tom McClellan

 QQQ is the ETF which tracks the Nasdaq 100 Index, and even though that index is only down 2.7% from its recent multi-year high, investors have been fleeing out of QQQ for the past few months. This week’s chart shows the number of shares outstanding in QQQ, a figure which changes every day as traders and investors become more or less interested in owning that ETF.  The sponsoring firm, Invesco PowerShares, issues or redeems shares as necessary in order to keep the share price as close as possible to the net asset value.  So watching the number of shares outstanding can be Read More 

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Tim Ord: The Ord Oracle - February 5, 2015

by Tim Ord

Monitoring purposes SPX: Long SPX on 2/3/15 at 2050.03. Monitoring purposes GOLD: Gold ETF GLD long at 173.59 on 9/21/11 Long Term Trend monitor purposes: Flat  Its hard to pick the time when this sideways consolidation would end but our statistics suggested it ended at Monday’s low.  A couple of things we want to point out on this chart is that the market only retraced 38.2% of the rally from the October low and suggests the current consolidation is at the half way point of the move up which give a target to 226 on the SPY.  The top window is the McClellan Oscillator Read More 

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Alan Newman: Crosscurrents - February 4, 2015

by Alan Newman

Rationales & Targets The most distressing development since our last issue was seeing major banks take out their December lows with a vast amount of room to spare.  We can’t tell you exactly how much is tied up in notional values for derivatives associated with the oil markets but we assume it is a huge number.  If it’s only 2% of the total, that equates to as much as $4.7 trillion, terrifyingly close to the total of $5 trillion in total assets for four key players; JPMorgan Chase (JPM), Citicorp (C), Goldman Sachs (GS) and Bank America (BA).  The charts of all four Read More 

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Jack Steiman: Reversal Up At the Dow 200's

by Jack Steiman

    The market tried higher in the morning on Monday only to see the rally sell off quite fast. The usual market swings took place for the rest of the day until about 45 minutes left in the session. From there the daily index charts all put in bottoming candles. The Dow was the very first index to challenge down to its 200-day, exponential moving average. That's because the multi-nationals have been hurt in the Dow-30 based on currencies. Once the Dow hit the 200's the bounce was on in a stair-step fashion, until the end of the trading day and up we went. It's normal Read More 

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Gene Inger: The Inger Letter - February 3, 2015

by Gene Inger

The January 'barometer' - worked-out exactly as we projected; defying the historical rationale about years ending in 5; or post-midterm years. What for sure we mentioned others didn't, was that you 'never' had this many years of upward action, where the next year was also up.  But we aren't dealing with a 'Farmer's Almanac', but rather monetary, fiscal, and economic environments that are extremely challenging. These do not warrant higher equity levels (with or without stimulus from central bankers). It's also a time when credit markets are diverging from what 'central banks' are Read More