Since bottoming in October 2012, inventory levels of copper have risen 190% in warehouses operated by the London Metals Exchange. That’s a huge and rapid increase, and it conveys a powerful message about the future for copper prices.
Articles written by: McClellan Financial
Since its creation in 1999, the movements of the euro currency versus the dollar have shown an increasingly positive correlation to the movements of the U.S. stock market. Exactly why it works this way is interesting to ponder but not particularly relevant for analysis. The fact of the correlation carries more importance than any reasons why it should or should not work that way.
The news this week out of Europe has to do with upcoming elections in Italy, and what that might mean for the future of the euro. But few news stories are covering the really important development in Europe, which is the shrinking size of the European Central Bank (ECB) balance sheet.
The point to take from this for individual traders is that we are in an environment of shrinking volume all across the market, and so that should be taken into account when interpreting volume figures for technical analysis purposes. It also increases the likelihood of a Flash Crash type illiquidity event, if there is not as big of a background level of trading to absorb any ripples or turbulence.
Looking ahead, the flattening of the yield curve during the past 2 years (thanks, Dr. Bernanke!) means that stock prices will be under downward pressure.
For years we have used mutual fund assets at Rydex and other fund families as a sentiment indicator. The proliferation of ETFs has had a big effect on the old-fashioned style of mutual funds, but it brings along with it the opportunity to look at investor sentiment in a whole new way.
The share price of Apple Corp surprised a lot of people this week with a one-day drop of 37 points, or -6.43%. Part of why that was a surprise is that over the past year, the standard deviation of Apple’s daily price change has been 1.8%, and so this was a down move which was greater than 3 standard deviations.
The preliminary report of 3rd quarter GDP for the U.S. is due out on Friday, Oct. 26, and so far the consensus expectation is for a rise of 1.9%. But my analysis of the data from the American Institute of Architects shows that the Q3 number could be even lower than that.
Many cycles analysts talk about the “long cycle” of the stock market being the 54-year Kondratiev Wave, named for the Russian researcher who wrote about long economic cycles in 1925. My own research shows that it is a 40-year period which matters more for the stock market.
When Fed Chairman Ben Bernanke announced QE3 on Sep. 13, 2012, he surprised a lot of bond market participants by specifying that the Fed would be buying up mortgage instruments instead of the Treasury debt that the Fed had been buying in QE1 and QE2.