Top Advisors Corner

February 2017

Top Advisors Corner

Alan Newman: Crosscurrents February 28, 2017

by Alan Newman

Rationales & Targets British economist John Maynard Keynes coined quite a few memorable phrases in his illustrious career, including “The market can stay irrational longer than you can stay solvent,” the principal reason we have not been willing to short as prices have risen to ridiculous extremes.  Keynes also said, “In the long run, we are all dead,” a quite sensible reason to remain bearish.  Bull markets die and the odds have risen sharply for this one to die and to die a nasty death.  Valuations are so stretched that a 50% collapse in price, as occurred twice Read More 

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Tom McClellan: Crude Oil Foretold the Trump Rally 10 Years Ago

by Tom McClellan

February 23, 2017 President Trump is being given credit for the post-election rally, based on analysts’ understandings of investors’ assumptions about what potential policy changes might mean.  And someday, I am pretty sure Mr. Trump is going to be blamed for a stock market selloff he similarly had nothing to do with.  Such is the nature of the media.  The uptrend still underway was foretold by crude oil prices 10 years ago, as this week’s chart illustrates.  This leading indication is one of the most fun insights I have uncovered in 22 years of Read More 

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Mary Ellen McGonagle: Energy Stocks in Downtrend While Crude Hits New High and the Utility Sector Turns Positive in a Bull Market

by Mary Ellen McGonagle

Energy Stocks in Downtrend While Crude Hits New High and the Utility Sector Turns Positive in a Bull Market……Unusual Sector Moves and How to Play Them. For the most part, the markets tend to act in a fairly predictable way.  Rising interest rates boost Bank and Insurance stocks, hints of an increase in military spending boost Defense-related stocks, and the possibility of lower corporate taxes helps the entire market.  Adding to that and important to my work – companies that report strong earnings go higher.  That said, these typical correlations don’t Read More 

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Tim Ord: The Ord Oracle February 22, 2017

by Tim Ord

SPX Monitoring purposes;  Covered short SPX 1/31/17 at 2278.87 =.09% gain; Short on 1/30/17 at 2280.90 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 10 period average of the tick on a two hour SPY could hold the key when the current rally could end.  The 10 period tick has held above “0” since late January and remains above “0” now suggesting the rally is not over.  The VIX and Put/Call ratio are showing a negative divergence but momentum seems to rule this rally and the tick Read More 

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Tom McClellan: VIX Futures Traders Finally Getting Complacent

by Tom McClellan

The recent story about low readings for the spot VIX Index is well-reported.  What has escaped the attention of many is that prices are now finally coming down for VIX futures at the long end of the maturity spectrum. The spot VIX has been below 15 for most of the time since July 2016, except for a brief spike up to 22.51 on the Friday before the November 8, 2016 federal elections.  Despite the spot VIX remaining low, the highest priced VIX futures contracts have been fairly steadily above 20. Usually the highest priced contracts are the farthest out expiration month Read More 

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Mary Ellen McGonagle: Important Tools to Help Navigate These Politicized Markets

by Mary Ellen McGonagle

As investors, it’s easy to get caught up in headline-driven swings that the markets can deliver.  Trump’s recent election has brought us a particularly charged environment with real and proposed policy changes pushing various sectors in both directions.  For example, last week we saw Trump’s new immigration policy push the markets down 1% on Monday. On Wednesday, there was a 2% rally in Healthcare stocks as talk of pushing drug approvals through faster was well received.  And finally, the week ended with a strong rally in Financial stocks sparked by Trump’s comments Read More 

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Tom McClellan: Low QQQ Volume a sign of a Top

by Tom McClellan

When investors get complacent, they do certain things.  They show up as bullish in the various surveys.  They bid tiny premiums on options, driving down the VIX.  They put all of their cash to work, letting money market fund levels get down really low.  And they trade tiny volumes on QQQ.  This week’s chart looks at a 10-day simple moving average in the daily trading volume of QQQ, the largest of the ETFs which tracks the Nasdaq 100 Index.  Low readings like this are associated with investor complacency, and thus with important price tops.  Read More 

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Tim Ord: The Ord Oracle February 8, 2017

by Tim Ord

SPX Monitoring purposes;  Covered short SPX 1/31/17 at 2278.87 =.09% gain; Short on 1/30/17 at 2280.90 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  Equity Put/Call ratio (CPCE) closed yesterday at .75.  CPCE readings of .75 and higher predict a higher market averaging 1.3% in the next five days.  Friday the Total Put/Call ratio (CPC) closed at .76 which gave a prediction for a chance of higher price in five days of only 36%.   The pattern that formed from mid December to mid Read More 

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Tom McClellan: A-D Line New High

by Tom McClellan

When the NYSE’s A-D Line hits a new high, it conveys a clear message that liquidity is plentiful.  The market might encounter other types of problems, such as investors’ emotions suddenly swinging, or a big news event rocking the market.  But if liquidity is strong, the market can more easily recover from such problems. The DJIA has been in a concerted uptrend since making a final corrective low in February 2016.  The DJIA’s upward progress has been in fits and starts, while the NYSE’s A-D Line has made a more steady uptrend.  At several times, there were Read More