Top Advisors Corner

January 2017

Top Advisors Corner

Alan Newman: Crosscurrents January 30, 2017

by Alan Newman

Rationales & Targets GDP came in at 1.9% for the fourth quarter and 1.6% for the year and yet stocks trade as if we are in the midst of a tremendous economic boom.  In fact, the last time GDP was above 3% growth was a dozen years ago in 2005.  As well, inflation grew to a 2.2% annualized rate in the fourth quarter, providing additional impetus for the Fed to raise interest rates another notch if the trend continues.  Stocks have been able to shine with interest rates at historic lows, but a reversal will quickly kill that thesis.    As a reminder, Shiller’s Read More 

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Tom McClellan: Bitcoin is a Bubble We've Seen Before

by Tom McClellan

Most investors remember the 2000 Internet Bubble, which was an example of bubbles for the history books.  What is harder is to recognize a replica bubble when it appears again later, especially if it disguises itself.  This week’s chart reveals that the price of Bitcoins is replicating the 2000 Nasdaq bubble and its aftermath.  But the curious point is that Bitcoin prices are tracing out the dance steps much more quickly.  This is a great example of the new and improved “Efficient Market Hypothesis” or EMH.  No, it’s not the one you think.  The new EMH Read More 

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Tim Ord: The Ord Oracle January 25, 2017

by Tim Ord

SPX Monitoring purposes;  Covered 12/30/16 at 2238.83= gain .46%; Short on 12/29/16 at 2249.26. Monitoring purposes GOLD: Long GDX on 12/28/16 at 20.25. Long Term Trend monitor purposes:  Short SPX on 1/13/16 at 1890.28  Today the SPY pushed to a new short term high and the VIX made a higher low, setting up a divergence.  This divergence will go away if the SPY continues higher and the VIX breaks to a new low.  Notice that the SPY is making a third time higher since December.  This “Third time up” could be a “Three Drives to Top” pattern which would have a Read More 

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Mary Ellen McGonagle: Market Apprehension Trumps Inauguration But There Are Bright Spots Out There.

by Mary Ellen McGonagle

The markets have been trading mostly sideways over the last six weeks as investor’s initial election-induced exuberance has given way to apprehension about what a Trump election will really mean for the economy.  Let’s use a recent post-election surprise rally and then sell-off as a guide for what to look for when a sideways move turns negative. Below is a chart of the S&P 500 which is currently exhibiting trading action that has a strong resemblance to the sideways move that followed the surprise Brexit vote rally.  As you can see, the sideways move then resulted in a Read More 

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Tom McClellan: High AMO Says Rates Should Stay Low

by Tom McClellan

 The Atlantic Multidecadal Oscillation (AMO) is a bit of data that climate researchers use in their modeling of global climate change.  And it turns out that it has interesting messages for us about the long term trends in interest rates.  I will spare you all of the details of the AMO’s computation, but you can download the data yourself at NOAA’s web site, and read more about it at this page.  What we can see in the chart above is that there does seem to be a relationship between interest rates and global temperatures as modeled by the AMO Read More 

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Tim Ord: The Ord Oracle January 19, 2017

by Tim Ord

SPX Monitoring purposes;  Covered 12/30/16 at 2238.83= gain .46%; Short on 12/29/16 at 2249.26. Monitoring purposes GOLD: Long GDX on 12/28/16 at 20.25. Long Term Trend monitor purposes:  Short SPX on 1/13/16 at 1890.28    Our view of the market is going higher before going lower.  The Dow Jones industrials have been flirting with the 20,000 level for the last month and so far have not closed above that level.  Usually when the market gets close to a round number it normally breaks above it and we expect that will happen here.  The pattern forming on Read More 

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Tom McClellan: Stock Market Still Following Path of 4 Years Ago

by Tom McClellan

 Investors have been cheering the election of Donald Trump as the 45th U.S. president, thinking that he is going to bring a beneficial change for business, the economy, and investments.  But thus far, what he has brought since the election is just a carbon copy of what happened exactly 4 years before.  I addressed this pattern correlation here a few weeks ago, as foreshadowing of what we should all expect depending on the election’s outcome.  The key point to this chart is just how similar the market’s behavior has been during President Obama’s second term to what it Read More 

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Alan Newman: Crosscurrents January 9, 2017

by Alan Newman

Rationales & Targets We were reminded a few days ago by our friend and savvy trader, Grant Nobel, that the Russell 2000 Index was about as overvalued as one might imagine, trading at infinity times earnings.  It’s bad enough to see the broad S&P 500 at a P/E over 26 and the Dow Industrials at a 21.4 P/E, but a 2000 stock index that shows negative earnings?!  Good grief.  One would think an index of 2000 small caps just generate something, anything in earnings.  Even a year ago, the Russell 2000 were trading over 152 times earnings.  Despite the obvious Read More 

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Tom McClellan: Debt of DJIA: Who Gets to 20* First?

by Tom McClellan

I got to wondering about all of the NYSE traders on CNBC sporting their “Dow 20,000” hats.  Hitting that level seems elusive, but they keep them at the ready. Interestingly, if they would do just a tiny bit of embroidery modification, they could be assured of making those hats useful.  Instead of “Dow 20K”, how about “Debt 20T”?  It may be just a fun numerical coincidence that the DJIA is approaching 20,000 while the total federal debt is approaching $20 trillion, but there it is anyway.  According to the Treasury Department, the total federal Read More 

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Tim Ord: The Ord Oracle January 6, 2017

by Tim Ord

SPX Monitoring purposes;  Covered 12/30/16 at 2238.83= gain .46%; Short on 12/29/16 at 2249.26. Monitoring purposes GOLD: Long GDX on 12/28/16 at 20.25. Long Term Trend monitor purposes:  Short SPX on 1/13/16 at 1890.28  The NYSE composite daily chart above.  The potential “Three Drives to Top” may be forming on the NYA. The retracement off of the second top was 61.8% and came on increased volume giving credit to this pattern. The McClellan Oscillator is back above “0” (close near +47) and back in bullish territory.  The Equity Put/Call ratio closed Friday at Read More 

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David O. England: Ask the Professor-Dow 20,000 and Predictions for 2017, plus more...

by David England

Q. Professor, how important is the DOW hitting 20,000? A. First, I do not want to minimize the DOW Industrials run to 20,000.  I like the increased value of parts of my portfolios but realize I have not made one penny unless I sell and close the trade.   With all the media cheerleading, I would be surprised if the DOW does not hit 20,000 by the second week of January, if not before.  Keep in mind; the DOW Industrials have thirty stocks and in no way represent the strength or weakness of the entire US stock market. To hear a recent interview where I Read More