Tom McClellan: These Decades-Long Correlations All Predict A Major Sell-Off Later This Year
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- เผยแพร่เมื่อ 29 ส.ค. 2024
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Stocks markets have had a massive run since November of last year and all the major indices -- the S&P 500, the Dow and the NASDAQ - have hit all-time highs this week.
US GDP growth for the current quarter is currently predicted to be 3.6%, global economic growth as measured by PMIs has turned positive for the first time in 2 years, the official unemployment rate remains below 4%, the most important stock to the markets -- Nvidia -- just beat expectations on earnings & revenues...
So it's unsurprising the bulls are feeling large & in charge right now. Talk of hitting S&P 6000 later this year is getting louder.
Is that likely?
In heady times like these, turning to the data & navigating by what it's telling us is often highly useful. Which is why we're fortunate to have one of the best technical analysts in the industry, Tom McClellan, joining us today to share his latest interpretation of the current market action.
Tom is watching several key indicators that, if their decades-long correlation with the stock market continues to hold, suggest a material correction is coming in the second half of this year.
#stockmarketcorrection #stockcrash #oilprice
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Gr8 guest! 👏🏻
bone head
I hope Tom is right, but a ten year delay between crude oil prices and DJIA seems a little farfetched...
my thoughts exactly
I am coming to the conclusion that Madame Mimi’s Tea Leaves, monkeys throwing darts, and the Quatrains of Nostradamus are just as reliable as the legions of “experts” spouting off on TH-cam finance channels.
That's what I thought as well. But I do believe he's right that the Fed is making a mistake holding rates too high right now and I do believe he's right that the Fed has a much smaller impact on inflation that everyone gives them credit for.
Things like climate and weather probably DO play a roll, I can see oil prices playing a role, international geopolitics, Federal economic policies, and the giant $35 trillion elephant in the room is how much money congress is deficit spending just to name a few that are individually MORE impactful on inflation than the Fed, especially when you combine all of them together vs the Fed you're probably talking 90% vs 10% (the Fed). I can actually make a case the Fed is causing as much inflation as they're helping it.
However the Fed can ruin the economy if they're asleep at the switch for too long (ie not listening to the 2 year yield or yield curve). It's always fun and games for the banks with high interest rates, they can theoretically make more returns on lending, but when banks start failing, things seize up quickly.
As for timing anything, even he doesn't even bother except advance/decline charts on the NYSE.
@@omnimoeish he has some very good points...
He has discovered the algo of the matrix.
This channel has fiercely fought this entire Bull rally every step of the way! I will get very nervous the day it turns Bullish. 😊
Bulls climb a wall of worry, and bears slide a slippery slope of hope.
@@deviationblue and every bull market ends after new all time highs. Anyone with eyes to see can see a multitude of troubles brewing in the global economy and its monetary systems.
The sky is dark with so many potential black swans flying overhead but it is anyone's guess which one we get if not more than one.
Just the same I am playing this market for all its worth for as long as it's good keeping a constant eye on the exit.
I've missed out on a lot of gains by waiting and waiting. The bulls are officially running for the summer and it's time for the little people to get a piece of the pie! Toro to those with courage!
@@believeroftheword4627 buying at these extreme highs is just silly - better off on the sidelines until there is clear confirmation to short - the global economy is crashing - that's for sure - so now it's just a matter of when there's not enough new liquidity in the markets to keep them at these bubble levels - then short like hell - there's a reason gold is on a break out - there are so many indicators that are never wrong that are flashing red- Powell kept the markets and banking system going for 12 months with their stimulus programme of BTFP - that ended in April -now the market is running on fumes and share buy back programmes from the Big five tech companies and some oil majors - that's it!!!! oh, and a bit of US gov stimulus via the hilarious inflation reduction act trillions
@@danielturner9832 YUP,. I've been, "All In" for, 3 Years Now and Drawing, NICE, ETF / CEF, Dividends ( Bot, the Major Dips ) and, COMPOUNDING $$'s, all the While !
I "Listen" CAREFULLY to only, Tom Lee and Jeremy Siegel and I "watch" the FED's noise and,.. the Charts !
Holding STILL with, NO reason to,.. Sell,..Yet ! I really LOVE, All this,.. "Negativity" ,.. Seems, very, VERY "Bullish",.. to Me !!!
If you are not in the financial market space right now, you are making a huge mistake. I understand that it could be due to ignorance but if you want to make your money work for you...prevent inflation
Jane Roy
My financial advisor , she’s a professional and has helped many become millionaires fr
+1
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The most significant lesson I gained from the stock market in 2023 is that uncertainty prevails, emphasizing the importance of humility. Adhering to a long-term strategy with a competitive edge is key
Certainty eludes everyone; thus, it's vital to establish your own methodology, handle risk, and adhere to your strategy unwaveringly. This commitment should endure challenges and successes, all while maintaining a commitment to ongoing learning and improvement.
Embracing uncertainty, I realized after five years that attempting to predict market outcomes through chart analysis was futile due to the unpredictable nature. My lack of a mentor led to six years of struggle. I transitioned to following the market's direction and adopting a straightforward, disciplined approach.
Who is the professional who is advising you, if you could perhaps tell us? As a novice investing in stocks without the correct direction of a professional, I have lost a lot of money.
Camille Anne Hector is the analyst that helps me. She has a large following and is easily found online. She has extensive understanding as I have made so much since following her.
I just Googled her name and her website came up right away. It looks interesting so far. I'm going to send a mail to her and let you know how it goes. Thanks for sharing
Was just looking through this channels history over the last couple years. Always predicting a major market crash right around the corner.
I have noted the price of goat meat brought forward 8.5 months correlates with the market LOL
I'd be curious to see pumpkin prices and correlation to the market too. LOL
You two are a couple of fools
Can you not read a chart with more than a century of correlation?
Have you not seen or experienced other correlations?
😅
If these were actionable correlations, they wouldn't be told. Once actionable correlations become common knowledge, the correlations dissipate.
Tom appeared on CNBC mid August 2015 (I believe it was a Friday) saying we were due for a correction (showing a similar series of charts) and I believe on the following Monday or Tuesday the market started a 12% nose dive.
It may all be coincidence, but there are a few occasions where his predictions are absolutely scary.
Of course it's useless. He's literally overlaying two separate charts and making some weird claim. You can do it with any charts and data with that kind of charting rule. (i.e look for charts that match your goals and overlay them...) LOL
No it doesn't, people are not a genius hive mind and people have bises.
@@billybudapest3129 exactly so I take this analysis and put it beside others from different sources and see if they fit together.
I see a puzzle coming together though the image is not quite complete. I do have a better idea of what the image may be though and that is because I watch interviews like this.
There are so many dips in both charts that you can always find ones that coincide, no matter what time interval you use.
I’m a happy subscriber of Tom’s. If anyone is in doubt - listen to his first interview with Adam back on Wealthion - where he gave essentially a to the date prediction/description of what was to happen the following year 👍🏻
Indeed. He’s been right on the money, so to speak, especially on the timing.
I enjoy your pods; however, it would be very useful if you would insert the date your pods are filmed. Not having the date indicated can lead to some confusion.
These correlations seem to be meaningless.
This guest lives up to your new channel name. Thoughtful. Good stuff. Tom’s take on the criminal aspect of “normalizing” inflation is spot on.
Tom's work is at the least, very facinating. It's sad that so many comments are small minded hostilitly. But then, we beg for out of the box thinkers, then take pot shots at them. From a very different perspective than Tom's, the comments section remindes me of David Hunter who seems to have called it quite well.
If you plot David and Tom’s calls on timing of the ups and downs over the past 2-3 years, they correlate very closely…and they’ve both been correct.
This sounds like astrology for stocks. If anything should be saying there is trouble ahead it’s that inverted yield curve, but we won’t see that until we are into the uninversion.
I don’t see much correlation in this oil vs DJIA graph 📈 A good test is to generate two random series, if you see a correlation or some trends, it indicates you should not trust your judgment
Correlation is not Causation. There is no explanation for this random correlation. Dangerous to give this any credibility.
I don't think that's true at all. Correlation could simply identifying a more fundamental force which just happens to show up in the oil market.
It could be as simple as investment money of oil companies moving in and out of bonds or construction which average out at 10yr period in response to market changes.
There is always a market sell-off coming on this channel.
Yes, and the sky is or will be falling. For long term investors, we expect sell offs and market tops. That’s why we reinvest our dividends. But this man has a system! He has found the key to the market! Another Pied Piper. Best wishes.
Bingo. And the vast majority of the time... bears sound smart, but bulls make money.
Someday they'll be right 😜
Agreed, the sentiment is certainly negative here - very subjective take on something as complex as markets.
Of course there is always a market sell-off and that is always 100% certain. It's almost like the "predictions" in the bible. The bible "predicts" something in the most generic way imaginable and presto, it will eventually happen given enough elapsed time. The issue is not whether the sell off will occur but WHEN!!!! So, if the panoply of clues lean more and more towards a sell off, then you get more and more into cash and wait for the sell off to occur. It's that simple. Currently, Uncle Fraud is helping to rig the market with a wide variety of lying statistics. Everyone knows this and we can surmise that they are doing it for one purpose and that is to help the demonrats in the election and to give Bribem some bragging rights. The stock market is going to falter and it will probably happen AFTER the election ESPECIALLY if they allow Trump to win in a non-rigged election.
Why 10 yrs? 10 yrs is long time, it is hard to think they are correlated.
He literally said he doesn’t know why it’s just like that he doesn’t know himself why
If you believe the mainstream talking point that today's elevated housing prices and shortages are because of the 2008 housing crash and the subsequent lack of construction, well that would be a 15 year lag. Why wouldn't an oil bust have the same dynamics, if you have to look for one?
In the live chat, “Is that Adam’s brother?” 🤣
“Liquidity is like the wind.” Awesome analogy, Tom.
“This chart is not a good timing tool.” (Even though it helps explain and understand things). Also an extremely helpful statement for folks learning about these influences.
Great interview. I love the forward looking stuff.
Tom is a class act.....always enjoy....
Retrospective correlations lack validity and actionable information; it's an attempt to find method in the market madness?
It’s data mining.
You have a road map it is up to you to choose the route
Tom is absolutely a great guest - his charts & insights are very valuable Indeed! Have him on by Late October. thx
"unless the Fed puts a thumb on the scale" Isn't that something to conside all the time these days?
Is this guy serious?? If you look long enough at enough data sets you will find a strong correlation in the past at some point. No way you can predict the future this way. I hope he doesn't bet the farm on it.
ADAM ----- YOUR SHOWS ARE CUTTING EDGE. I BELIEVE THEM ALL. GOD BLESS YOU FOR TELLING US HOW THIS RESOLVES
Adam bringing that content. Let's get that 100k subs
Thank you so much for having Tom on!!
He's brilliant, really enjoyed this, thank you both!!
Loved this interview. Tom has a great take on things and love the long view!
There is a Dow Theory violation with transports well below all time highs which is a negative leading indicator
Nice Interview. Thanks 👏👏
👏🏾👏🏾👏🏾 Good interview, like the sharing the trip.
Really excited for this one! Thanks Adam
Tom is a great guest!
Awesome interview as always. Thank you, Adam.
Some great stuff there Adam. Good confirmation for Michael Howell who predicted a liquidity slump in April which took the market lower. Also, a dip in October with the Vix futures rising would chime with Lance’s prediction of a sell off prior to the election. Good job.
GREAT GREAT interview. Thanks Adam
I like it. Jim Simons would be proud of such an abstract correlation.
Thanks to Tom and Adam, I found this to be one of the most useful episodes of TM in the last 5 months or so, which is saying a lot because I find 85%+ of your guests able to share very useful info. I'll now use Tom's indicators as an early signal to forewarn of rough seas ahead.
Thank you very much...
A great video, super smart stuff
Just started watching. Hope you discuss the correlation he mentioned about a year ago between uranium and gold.
Fantastic conversation!!! THANK YOU!
An every 10-year chart is incredible.
I am not a believer--AT ALL.
I think if you look hard enough for a correlation, you'll find one. It's like patterns, if you like H&S formations, everything you see is a H&S formation and so on and so forth.
What a fantastic presentation.
Tom, Michael, and Lance, your market trifectas!
All I see are two different slopes on a log/log scale. Oil and stocks growing at two different rates.
Skeptical on any ten year time lag.
Without a disproveable statement as to why there is a correlation to 10 years, it is not a theory, it is superstition.
I see you interact with Tom all the time on Twitter. As someone who studies technicals only, I’m really looking forward to this one!
Tom McClellan is an excellent informative guest speaker. Thank you for having him on your show.
First, he says gold is forecasting higher rates this fall. Then he says Fed should cut because thats what the 2y suggests.
Gr8 guest! 👏🏻
Adam, I always enjoy your guests....even Mr. McClellan. However, as a 40 year professional manager/trader in the commodity futures space, I have heard a great deal. Much of your guest's 'correlations' make for great conversation, but on the surface his 'chart shifting' techniques appear to have substance, but does not really produce 'actionable in the market information that can be translated into a trade in and out of the markets.' This is the problem with people who talk about the markets and who's track records aren't audited or subject to strict regulatory rules. They have their place but for me, this falls more in the area of entertainment! I wouldn't get too excited about 20.5 month or 10 year lags to predict much of anything.
When an "expert" says he thinks the Fed should lower rates under these conditions .... you've lost me .... this, from a guy who worked with Paul Volcker daily at an agency bank in the early 80's ... and Covid did change most of the rules, but lowering rates now would be insane
Adams a favorite , quality people on and so informative. A solid THANK YOU
Thanks for branching out. Hope you get more into business as well. Legal. Accounting. Etc. Great charting interview. Tom, I love your Oscillator. Use it daily on Trading view. Keep inventing new charting methods! Good advice on letting go of past.
Excellent interview !
That intro is one of the most ludicrous examples of market predictions I’ve ever heard.
That’s simply way too arbitrary of a correlation if you are talking about a ten year offset to crude oil movement. It’s similar to Lance’s recent humorous remark that there’s a correlation between people who eat chicken and people that die by twisting in their sheets in bed at at night.
"Welcome to Thoughtful Money. I'm its founder and your host, Adam Taggart..." What an amazing and sultry male voice! I had to "back it up" and listen to your intro twice. I love listening to you, Adam. I'm so glad you decided to do your own thing. Congratulations on nearing 100,000 subscribers! 🙂
Adam isn’t sure if he wants to like this comment or not. Can’t say that I blame him..
Fantastic
Sunday content is kewl
Taggert and most of his guests put together shows with high degrees of kewliasity.
Thanks!
Thank you.
I'm not sure if there's anything from the past to correlate the current situation to. The system is so distorted and perverted I think the best thing to do is just go long anything tangible or derived from anything tangible.
Adam, for someone who has a macro lens and talks about metals AND crypto, I highly recommend getting James Lavish on the show
So, markets should start tanking somewhere in-between June & Feb.?
oh my. If this is more than a spurious relationship, then we'll be hearing how Tom went short in June and then got filthy rich after the market crashes.
But if he doesn't have any skin in this game, then what's the point? Well, it might be that it's very profitable indeed to call sell-offs, even if they don't happen most of the time. Because when they do, you're instantly famous. (And if there's no sell-off, you can always say, "hey, my data showed a firm relationship, but that doesn't mean it's an investible rule!"
Fascinating idea and thought
Let's try astrology next, delving, entrails, or technical analysis. All about the same.
Wow! Once again, great analysis on Oil's predictive nature for stock market.
This was SO good! Saved to both my Financial and How To playlists. ❤
Economic investigator Frank G Melbourne Australia is following this informative content cheers Frank 😊
The problem with any forecasting tool is it is only as good as the data provides opportunity for. When divergence exists, it means we are missing data that would be required for a combined data set that could provide a normalized metric to compare against
Excellent.
Re: Market timing and Entry points - as Howard Marks famously said: “It ain’t so much what you buy...it’s what you pay”
While the buy-in point is yet to occur, 5% ain’t hay!
Regarding oil/market 10-yr correlation, and the admission as to not understanding why it works, I would use the trite saying, 'Correlation is not causation"
Markets are opposite of the intellect that requires full transparency
Great interview, but I am left with a question which is, if Yellen in the Treasury is creating lots of money for Congress to spend, is that not getting into the economy and being invested into the S&P500? In the interview I can only remember the Repo Market and the Fed having an effect on the S&P and the not understanding why the S&P 500 was going up if the Fed were tightening which then went onto the Repo Market, but I didn't get the sense that fully explained the increasing S&P500? I am from the UK and invest in ETF's including S&P500 which would add to its increasing value along with millions of others from around the world.
For your own sanity, please, do not take any advice from this guy.
M2 chart is interested, really helpful for marco forecast. ❤
Kudos to Tom as a former Army helicopter pilot. I am a former Army helicopter aircrew member.
Am I the only one that thinks a lot of these charts are BS? Just manipulated until it kinda fits.
Counter-trend trades can be very profitable. Catching the ones that actually change the trend requires very detailed and in-depth market analysis. When they work, it can be fantastic!
Lance and others have commented on this formula to estimate liquidity:
Fed balance sheet minus TGA balance and also subtract reverse repo balance
The chart showing Fed balance sheet minus the Repo is very useful. The chart showing crude 10 year lag vs DJIA is very interesting.
I'm out, if the ' lag efect team.' is right I'm for a big win, if not, keeping the cash.
For nearly 2 years I have been watching these kind of videos every where on TH-cam, economy is crashing, its coming etc .. only to loose my savings
You only lose your savings if they leave the account. You may lose purchasing power to inflation I not kept pace with it.
I believed these kind of videos and sold stocks for loss and waiting for nearly 2 years to get back into the market
Fabulous ,Adam !
I would recommend also including the PBOC, BOJ, ECB balance sheets in the liquidity analysis to get a more global picture.
@30:00
Could part of the missing equation be the amount of GDP being propped up by federal spending and payroll? Compare treasury purchasing in dollars (real terms, not nominal), and US deficit spending.
The government is propping this time, rather than the federal reserve. To me, this points to coming conflict.
ive seen this guy once before. fascinating to see real data. thumbsup.
Is there gonna be another fracking boom?
I think you need to look at the correlation coefficient in matching up the events and use a moving window for the match. Visual inspection suggests that maybe many decades ago this correlation coefficient was correct to do a 10 year lag. But the last 20 years line up best on top of each other. The dates line up better ontop of each other than shifted by 10 years.
Above the Best!
Totally agree that High yield bonds, RRP and fed balance sheet are great liquidity indicators. Its been frustrating that even the market has disconnected from these. Not until we loose positive gamma and momentum effects will it snap back. Usually we need a big catalyst.
I've noticed many of the people interviewed on this podcast advocate for improving the "FED". If you believe that central planning is a good way to manage any part of an economy, then you are not a believer in free markets. Central planning and free markets are not compatible. Interest rates can be set by market forces much more efficiently than any Federal Reserve Central Bank! The "FED" must be abolished!
Shucks! I did ANOVA (analysis of variance) by hand for part of my one attempt at research. Ran IBM cards for factor analysis portion
this is hilarious to compare 10 year price alignment