11/1/2025
Stocks
In my newspaper column posted Friday morning, i mentioned the difference in the weighted versus the unweighted indexexes. They are two different stories. Here is the short term picture.
This is the weighted SPX where the Magnificent Seven comprise over one third of the value.
Here is the equal weight SPX where all stocks carry the same value.
The Sell-off in SPXEW is much more pronounced
The rally will last as long as the love affair with those seven high tech stocks lasts. And then this will look a lot more like March 2000, the peak of the dot,com mania. Then the NASD lost 75% of its value in the next two years.
Here is another clue, the SPX Advance Decline peaked this summer and has declined since.
the A/D line for SPX and NYSE tends to be the overall best indicator of market direction.
Interest in technology precedes a top n the markets. The tech was radio in 1929, computers in 1966, dot,com in and internet 2000, and low tech housng in 2007. This time it will be AI with Apple at $4T and NVDA at $5T. In 1999 Time Warner bought AOL, an internet engine. It was deemed a brilliant move. When Time Warner wrote the whole thing off, not so much. AOL had nothing unique as it tuned out. The big investments in AI have yet to make the investors much money, here we go again.
Interest Rates
Ten Year Note Yields - these track mortgage rates or the other way around. Mortgages hit a low this week but Note yields rose the very day of the FED cut, Wednesday, note the red arrow.
If I had drawn a trend-line along the descending tops, yields are just about to break out.
I noted the increase in auto repos. The WSJ article detailed a woman adding water to her dish washing liquid and clorox. These are signs of a deteriorating economy. Trump's tariff madness as Jason Riley puts it, has raised consumer prices despite what Lutnick and Navarro claim.
Silver
It is rebounding from the first sell off, ths should end this week. The move lower to $40 will resume at that point. I will look to add more ZSL a short sivler fund at that point.
Crude oil pulled back to fill the gap from its launch off the 10/21 low.
Apache APA is more sensitive to the changes in oil price than giants like Exxon Chevron.
Notice how the APA chart tracks the WTIC chart above. APA is one third the price of the oil ETF USO, so this is a better buy I think.
I hope readers are enjoying our new blogspot platform, It is working far better thanTypepad.
dennis.elam@att.net
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