S&P 500 and the 3-Month VIX Relative to the VIX | Stephen Suttmeier

The 3-month VIX relative to the VIX (VIX3M/VIX) is below 1.0 and currently oversold. This tactical sentiment indicator signals fear heading into the 2024 Presidential election. We have observed similar conditions with the VIX3M/VIX being oversold ahead of the 2020 and 2016 Presidential elections. This suggests taking a contrarian bullish view on U.S. equities and supports the likelihood of a year-end rally.

Stephen Suttmeier, November 5, 2024

 

The spot VIX Index is currently above all of its futures contracts, in spite of a drop on November 5th. This is a condition reliably associated with price bottoms (and/or worrisome elections).

Tom McClellan, November 5, 2024 

S&P 500 vs VIX Put/Call Ratio | Jason Goepfert

Volume in VIX puts was more than two times that of calls on Friday.
That's one of the highest turnovers in 15 years.
It has typically spiked at times of extreme anxiety.

Jason Goepfert, November 4, 2024.

 

 Preliminary CBOE Put/Call Volume Ratio on Nov. 4 at 2PM ET 

is officially "pretty far up there".

Tom McClellan, November 4, 2024.

 

 S&P Cycle Analysis - Time and Price Projections | Steve Miller, November 4, 2024.

 

 S&P 500 E-mini Futures (daily bars) | November 4, 2024.

Strong NYSE Breadth Indicates Liquidity is Abundant | Tom McClellan

Strong NYSE breadth says liquidity is plentiful.

A higher number of advancing stocks suggests bullish sentiment, 

more declining stocks bearish sentiment.

Tom McClellan — October 16, 2024.  

"No need to fear S&P 500 new all-time highs … until they cease."

Jeff Hirsch — October 17, 2024.

A doomed empire in the grips of morons and criminals.

Budget Deficit Bullish for S&P 500 and Gold | Tom McClellan

The final stats are in for fiscal year 2024, and the federal debt in the U.S. grew by $2.297 trillion versus a year earlier, and as of September 30, 2024, the total debt stood at $35.465 trillion. 

 

[...] A rising debt load is a horrible thing, but it is a bullish thing. And trying to pay down the debt is a bearish thing. [...] And deficits are also really bullish for gold too.

 

Reference:

Tom McClellan (October 04, 2024) - Deficits Are Horrible, But They Are Bullish.

S&P 500 Soared 7% in Summer, Shifts Weakness to October | Wayne Whaley

For this study, summer is defined as the three months from June to August. Historically, the S&P 500 index tends to show modest performance during the summer, with an average gain of 1.43% since 1950 over these three months. In 2024, however, the S&P 500 achieved an impressive 7.03% gain during the summer, with individual gains of 3.5% in June, 1.1% in July, and 2.3% in August.

 

The weakest seasonal period of the year historically occurs in the second half of September. However, strong summers often push much of the traditional September weakness into October, specifically from October 18th to October 28th. During this period in the years with a summer gain of over 5%, the S&P 500 has averaged a loss of 2.53%, with a performance record of 4 gains and 19 losses.

This period is followed by one of the strongest periods of the year, from October 28th to November 5th. In years with a summer gain of over 5%, this timeframe has averaged a gain of 2.61%, with a performance record of 21 gains and 1 loss.

Reference:
Wayne Whaley (August 31, 2024) - Five Percent Summers. 

 

4-Year Presidential Election Cycle 1949-2020 vs 2021-2024

— Jeff Hirsch, August 19, 2024

Top Reasons to Exit S&P Short Positions Soon | Allen Reminick

The S&P market has been behaving as expected. It looks as if April 15 (Mon) or so could be a low followed by a bounce for a few days until April 18 (Thu) followed by another decline into the April 24 (Wed).

 

 Apr 15 (Mon) Major Low ?
Apr 18 (Thu) High
Apr 23-24 (Tue-Wed) Low

Bounce
May 9 (Thu) Major Low ?

May 24 (Fri) Major High
  Jul 24 (Wed) Major Low

 

Today is April 14 (Sun) and we're looking at this forecast as being very similar. But there are several different variations of this particular pattern. The most reliable one so far has been the year 2000 market. It is repeating almost exactly what happened in April of 2000 and that low came in on April 14. But we are looking for a low around April 23-24 (Tue-Wed), another bounce and another low around May 9 (Thu). The May 9th low may not be lower than the market is right now.

The analogs we're using are the year 2000, the 1996 market and the 2006 market. All of which are connected to the present market and you can see the overlap of the 1996 and the 2006 markets and how they go forward is extremely similar but not identical.

They both have a high late May, they both have a low late July. But from now until late May they have different variations on how they go forward. So at this point one needs to be cautious about expecting continued lower prices because the fourth wave does not have to be a big decline. It's after the Elliott fifth wave that you'd expect to see a major decline. 

 

After this whole correction phase is over we're expecting a new high by May 24 (Fri), a strong rally in the month of May and then after that a very big decline from May 24 (Fri) down into July 24 (Wed) area. That could be a very significant short position for those who want to go short or at least one once a hedge, one's long positions during that time. After that July low the market should again rebound strongly and by the end of the year make new highs.

So we're looking at a fourth wave correction which is probably going to end either in the next two weeks or it could be as late as May 9 (Thu) and then the fifth wave rally until late May followed by an ABC meaningful correction of the whole move from October 27th until May 24th that whole up move should be corrected in the two months after that. So if you're looking for a big decline it's not likely to happen now. It's more likely to happen after the end of May. 

 

Quoted from:
Allen Reminick (April 14, 2024) - Top Reasons to Exit S&P Short Positions SOON. (video)

 Solunar Rhythm, Cosmic Cluster Days & Sensitive Sun Degrees | April 2024

 

 

See also:
Tom McClellan (March 29, 2024) - Crude Oil's 10-Year Leading Indication for US Stock Market.

Crude Oil's 10-Year Leading Indication for US Stock Market | Tom McClellan

One of the big picture forecasting tools is crude oil prices as a leading indication for the overall stock market. The first chart shows crude oil prices back to 1890 compared to the Dow Jones Industrial Average plotted on logarithmic scales. The price of crude oil is shifted forward by 10 years. The correlation isn't always perfect, but generally speaking, when there is a rise in crude oil prices, 10 years later, there is a rise in the stock market. When crude oil prices go flat, the stock market goes flat. 

We are not yet quite at that 10 year echo point in stocks, which would equate to June of 2024, 10 years after crude oil peaked. That means the next few years are not going to be so great, especially between now and early 2026. Early 2026 will be a great time for investors to ride the stock market long all the way to 2028. 

 

Quoted from:
Tom McClellan (Mar 28, 2024) - 'Unpleasant Time' Ahead For Stock Market. (video)

 

Election Years Are Different | Tom McClellan

I have been writing about the Presidential Cycle Pattern since 1994, using the pattern which is derived from averaging together SP500 price data in 4-year chunks of time. One difference in how I do this versus others is that I start each 4-year period as of November 1 instead of January 1, to better align with election day. This week's chart looks at the differences (and similarities) in the versions of the Presidential Cycle Pattern depending on what type of president is in office. The green line reflects first term presidents from a different party than the last president, and reflects the condition we have now.

  » March is typically a sideways month, part of a larger sideways pattern 

lasting all the way until late May. The market normally rallies from June to election day. «

[...] A lot of the time, the two patterns behave very similarly. But in March of the election year, there is a notable difference. When a first term president is in office and running for reelection, March is typically a sideways month, part of a larger sideways pattern lasting all the way until late May. March is different, though, when a second term president is in office (red line). [...] The stock market normally rallies from June all the way to election day [November 5] when there is an incumbent running for reelection. And usually an incumbent will win reelection. That is how things normally go.

 

Larry Williams identified June 2024 in the current decennial pattern
 as  » the sweet spot with 90% accuracy « to buy and hold until December 2025. 

[...] This year we have a challenger who is not an unknown quantity (to Wall Street), who at the moment has a slight lead in the polls. This type of condition is totally backwards from how election years usually go.  Add to that the additional unknowns about how President Trump is facing multiple trials for alleged crimes, and we have an election year completely unlike any previous one.  So trying to run a forecast model based on how things have gone in prior election years may just not work this year.
 

Reference:
Tom McClellan (Mar 14, 2024) - Election Years Are Different.

Gold Breakout - Target 2,530 to 2,700 | Peter L. Brandt

This is a FOR REAL breakout in Gold. Goldfinger points to a target range of 2,530 to 2,700.

 

Peter L. Brandt @ Twitter/X (Mar 06, 2024)

 

June is typically the lowest month for Gold. 

The graph is based on the average prices; there are times when June tops rather than bottoms. 

Buy dips around monthly pivot levels. 

Friday’s Commitment of Traders (COT) Report from the CFTC had an interesting point about gold. The big money "commercial" traders responded to the rally in gold this week by posting the biggest jump in years in their collective net short position. This marks this week’s pop as at least a short term price top.

There has also been a big jump in total open interest lately. Usually such events mark a blowoff top in gold prices, although occasionally they are seen at a breakout point.

 Curiously, though, the small speculators in the "non-reportable" category were not chasing this week’s rally, and instead they reduced their net long position. They have not been net short as a group since 2016, so the analysis task consists in evaluating their relative net long position as a group. Having the small specs feel scared by this rally says it has some enduring legitimacy, once the short term overbought condition can get worked off. 

Tom McClellan @ Twitter/X (Mar 09, 2024)

The Heartbeat of the Sun│Valentina V. Zharkova et al.

Valentina V. Zharkova (2016) - We will see it from 2020 to 2053, when the three next cycles will be of a very reduced magnetic field of the sun. Basically, what happens is these two waves, they separate into the opposite hemispheres and they will not be interacting with each other, which means that resulting magnetic field will drop dramatically nearly to zero. And this will be a similar condition like in the Maunder Minimum.

 

What will happen to the Earth remains to be seen and predicted because nobody has developed any program or any models of terrestrial response – they are based on this period when the sun has maximum activity — when the sun has these nice fluctuations, and its magnetic field [is] very strong. But we’re approaching the stage when the magnetic field of the sun is going to be very, very small. 

Reference:
V. V. Zharkova, S. J. Shepherd, E. Popova & S. I. Zharkov (2016) - Heartbeat of the Sun from Principal Component Analysis and prediction of solar activity on a millenium timescale.

 

See also:

Anthony Watts (2016) - Solar physicist sees global cooling ahead.

Mikhail Gorbanev (2016) - Solar Activity and Economic Recessions. 

 Tom McClellan (2012) - Sunspots - The Real Cause of Higher Grain Prices. 

Henrik Svensmark (2007) - The Cloud Mystery.

Martin Durkin (2007): The Great Global Warming Swindle.

Judith Lean, Juerg Beer & Raymond Bradley (1995) - Reconstruction of solar irradiance since 1610: Implications for climate change.

 

Wheat Prices vs Sunspots, 1900-2012

Solar Activity and Economic Recessions, 1935-2012

S&P 500 Index vs Eurodollar COT | Update

While the Nasdaq 100 already surged to a new all-time-high last Friday, the S&P 500 Index is still below the late January 2018 high. However, also the S&P 500 seems to follow the Eurodollar COT's Leading Indication towards a major high in stocks around March 23rd (± 2 weeks). See also HERE

S&P 500 Index vs Eurodollar COT | Forecast 2018

Here is another Tom McClellan approach to forecast the stock market one year ahead: In the above chart the blue line represents the Commercials' Position Net Long Position in the Eurodollar (COT Report available HERE) as % of Total Open Interest, set forward 54 Weeks. The projection seems to correlate best +/- 2 weeks. About the hows and whys of this indicator, Tom McClellan, the inventor, wrote back in August 2015: "The basic idea is that I take data from the weekly Commitment of Traders (COT) Report on the commercial traders’ net position in eurodollar futures, and then use that as a leading indication for the SP500.  In this case, the term Eurodollar (ED) refers not to a currency relationship, but rather to dollar-denominated time deposits in European banks. So it is an interest rate futures product [...] I do not know why it works to have the ED COT data shifted forward by a year to see what the SP500 will do. But after seeing that it has worked for several years, at some point we stop wondering about the “why” question, and start to accept that there really is something working here." (HERE) However, he later commented this was one of his "favorite indicators. But favorite does not mean perfect" (HERE).

DJIA vs Crude Oil Set Forward 10 Years | Major High around June 2018

Tom McClellan's approach projects a major high in US-stocks into around June 2018, and a major low into January 2019 (see also HERE + HERE).

Sunspots - The Real Cause of Higher Grain Prices | Tom McClellan

Tom McClellan (Jul 27, 2012) - Sunspots are a big driver for wheat prices. Various pundits are putting out stories blaming the drought in the plains states on global warming [...] A better explanation for the drought, and the ensuing spike in grain prices, is that this is all part of the normal 11-year sunspot cycle. But to find that relationship in the data is what the story is about. The first point to understand is that sunspot activity has now been scientifically linked to changes in cloud formation. When the sun is more active, the charge particles streaming out from sunspot activity help to sweep away cosmic rays that might otherwise hit earth's atmosphere, where they play a role in cloud formation [... | HERE + HERE] Once you get past that more difficult scientific hurdle of understanding that cosmic rays and clouds are related, it is pretty easy to understand that less cloud formation is related to less precipitation, and thus poorer growing conditions for rain-irrigated crops. That is what we are seeing with this year's drought, and it has been pushing up grain prices accordingly. Looking across the last hundred years of price data on wheat, it can be difficult to see the relationship between the sunspot number and wheat prices. Part of this comes from the fact that there are other factors which sometimes act upon crop yields and thus grain pricing. But a big factor is that the units we use to measure wheat prices, i.e. US dollars, can vary themselves, causing the relationship with sunspots to sometimes be disguised by what the dollar itself is doing. 



If we look at the history of these two sets of data before the modern era of floating currency exchange rates, we can better see how they were correlated. This chart shows raw wheat prices, un-adjusted for the value of the dollar. The sunspot number data is shifted forward by 2 years to reveal that bottoms and tops in the sunspot number tend to be followed a couple of years later by bottoms and tops in wheat prices. This relationship got into some trouble in the middle part of the chart, when President Roosevelt's New Deal price fixing artificially inflated wheat prices. The intention in the 1930s was to benefit farmers by keeping wheat prices up. That effort switched during WWII to the government putting a cap on all prices, including wheat, to support the war effort. Rationing of food, fuel, and other items took over for market forces. Additional trouble came in the 1970s, when the Arab Oil Embargo pushed up oil prices in 1973-74, reducing acreage under cultivation. Then later in that decade, the rising value in the dollar pushed down the dollar price of most commodities compared to prices in other currencies. So using dollars to see the normal cyclical relationship in price data became problematic.

All of this explanation brings us (finally!) back to the lead chart above. In [the above] chart, I have adjusted the dollar price of wheat, multiplying it by the US Dollar Index, which was created back in 1971. This mathematical step produces a unit-less measure of the value of wheat by factoring out the dollar's movements. Doing this allows us to better see how the peaks and troughs in wheat prices have been related to the sunspot cycle. I want to emphasize again that the sunspot number is shifted forward in that chart by 2 years, to reveal its leading indication for how wheat prices will behave. The conclusion from this is that the upward move in the value of wheat right now is just following the swoop upward in the sunspot number that began in 2009. We should expect to see generally rising prices for wheat and other grains until about 2 years after the sunspot cycle has peaked, a peak which has not even happened yet.

SPX | Narrowest 2 Year Percent Range of Monthly Closes

Credits: Nautilus Research

Tom McClellan: "Such low volume episodes are typically followed by uptrends. Exceptions noted."
Credits: Tom McClellan

Lumber Futures vs Housing Starts and Jobless Claims | Tom McClellan

Tom McClellan (Nov 19, 2015) - Lumber prices tell us pretty reliably and ahead of time about what is going to happen to real estate prices
and activity, plus interest rates. They can even tell us about what unemployment is going to do.

Bund Spread Gives Permission for Bear Market | Tom McClellan

Tom McClellan (Sep 24, 2015) - [...] German government bonds are known in the industry as “Bunds”, a contraction of the prefix “bundes” which is German for “federal”.  At the major stock market tops in 2000 and 2007, we saw the peak in the 10-year Bund-Treasury spread appear well in advance of the final price tops for stocks.  So because that spread was still rising in April 2014, my supposition then was that the uptrend had more months to live. Now we see a different condition.

Credits: Tom McClellan HERE + HERE

The Bund-Treasury spread peaked at 1.81 percentage points back in March 2015, and has since been contracting. Meanwhile, the DJIA and SP500 kept on rising to incrementally higher price highs as the summer wore on, eventually breaking down with the August 2015 minicrash. 

[...] With a divergence now in place between the DJIA and the Bund-Treasury spread, we can have a reasonable expectation that a bear market for stock prices should ensue.  If it plays out like the last two, the bear market should last until the Bund-Treasury spread gets back down at least to parity, or preferably even lower. That could take a while; in the 2000 and 2007 examples, it took a couple of years. The eurodollar COT leading indication already tells us to expect a downward trend until April 2016, so that gives us at least several months to see how the Bund-Treasury spread behaves.

Eurodollar COT Signals Big Drop in Stocks Still Ahead | Tom McClellan

Credits: Tom McClellan

Major Market Peak in August - Bear Market into 2016 | Tom McClellan

Tom McClellan (06/19/2015) - It's a little bit of an exotic indicator but it's probably my favorite because it gives us the answers a year ahead of time. What I'm doing is I'm looking at the commitment of traders report that's published each week by the commodity futures trading commission (CFTC) and they give a report on what all of the futures contracts that they track and who's holding them: either the commercial traders, which is the big money; the non-commercial, which is kind of the hedge funds; and then the non-reportables, which is people with very small positions that are not even worth having reported individually. The commercials are the smart money so when you look at what the commercials are doing as a group in eurodollar futures—that's an interest rate product, not a currency product—that tells you what the stock market is going to do a year later.

The stock market tends to follow those same dance steps almost literally. It got into a little bit of trouble back in 2013 when those traders weren't anticipating the stimulus of QE3 and it didn't work back then but it's generally been working almost perfectly since about 1997 [see chart below]. It correctly forecasted the 2008 decline. It correctly forecasted the bear market in 2002 and 2003. It correctly forecasted most of the big up-move that we've had off the 2009 bottom and now it's telling us we have a top due in early August and a decline into early 2016.

The Magic of 150 Months | Tom McClellan

Tom McClellan (June 11, 2015): A period of 150 months (12.5 years) shows up in lots of places as the time distance between several important turning points for stock prices. [...] the 150-month period is related to a longer 393-month turning point pattern by virtue of the Fibonacci ratio.  Multiply 150 times 2.618 and you get 393.  Alternatively, if you multiply 393 by 0.382, you get 150. It works backwards and forwards. [...] This is all relevant at the moment because we are arriving at the 150 month anniversary of the 2002-2003 lows [...] Counting forward 150 months from October 2002 gets us to April 2015.  And 150 months from March 2003 gets us to September 2015.  Split the difference, and we have May to July 2015, and that’s right where we sit now. 

Synodic Period of the Jupiter-Pluto Cycle = 12.46 Years = 149.52 Months.
Calculated and charted with Timing Solution.