April 25, 2025 – Is the recent stock market rally the start of something bigger—or just another bear market bounce? Tom McClellan of McClellan Financial Publications joins Jim Puplava to break down why he sees the current market as a prolonged bear, what key indicators are flashing, and how historical patterns in crude oil and gold could shape what’s next for stocks, bonds, and commodities. They discuss sentiment extremes, central bank gold buying, and the surprising signals for investors in 2025 and beyond. Get Tom’s candid outlook and discover where opportunities—and risks—lie by listening to the full conversation now.
Website: McClellan Financial Publications
X profile: Tom McClellan (@McClellanOsc) / X
Market breadth data: Stock Market Breadth Data | Daily Oscillator Data
Outline
- Bear Market Outlook: Tom McClellan believes the current market is in a bear phase likely to last until late 2025 or early 2026.
- Bear Market Rallies: Recent stock rallies are seen as temporary “dead cat bounces,” not the start of a new bull market.
- Sentiment Indicators: Professional money managers are showing extremely low exposure, historically signaling a market bottom—but not the bottom.
- Put-Call Ratio: High put-call ratios indicate oversold conditions, but in a bear market, these are often just pauses in a longer downtrend.
- Crude Oil as a Leading Indicator: McClellan finds that crude oil price movements lead stock market trends by about 10 years, currently signaling continued weakness.
- Gold & Central Banks: The ongoing rally in gold is driven by central bank buying, but McClellan warns of a potential sharp reversal.
- Interest Rates & Bonds: Long-term bond yields are likely to follow the recent gold rally with a lag, making bonds less attractive in the coming years.
- Investment Opportunities: Outside of cash, McClellan sees potential in fertilizer stocks due to rising crop prices, but emphasizes patience until the next bull market.
Charts
Transcript
Jim Puplava:
Well, after falling for several weeks, or almost a month, stocks have been rallying. Will this rally continue, or is this just a dead cat bounce? Let’s find out. Joining us on the program from McClellan Financial Publications is Tom McClellan. Tom, last time you were on, you thought we would get a dead cat bounce. Let’s go back to what you predicted in March and where we are today. How’s that playing out?
Tom McClellan:
Well, we’re playing out according to the schedule we’re supposed to be on. We’re in a bear market. We’re going to be in a bear market until somewhere around November 2025 to January 2026. But a bear market doesn’t travel in a straight line. It gets oversold, and then it comes roaring back, and people think, “Oh, good, new bull market.” And once you get everybody thinking that way, then it’s time for the next leg down.
Jim Puplava:
So, you sent me three charts, and we’re going to put these up on the website. The first one is the S&P 500 weekly with the NAAIM Exposure Index. Explain what that is.
Tom McClellan:
That’s kind of a fun indicator. There is an organization of professional money managers, people who believe in market timing, and they call themselves the National Association of Active Investment Managers. These are not buy-and-hold types. These are guys who do tactical asset allocation and market timing. And they do a survey of their members every week by email. The survey asks, “What is the average net position of your firm’s portfolios right at the moment?” And the answers can vary anywhere from minus 200% if you’re leveraged short, up to zero if you’re neutral, or plus 200% if you’re leveraged long, or anywhere in between. They average all those together, and that gives us the NAAIM Exposure Index. And the funny thing about this is these guys are professional money managers. These guys are professional market timers. And they are just as subject to the vicissitudes of the market affecting their moods as anybody else. So, when the market rallies, they get more bullish, and they get more fully exposed. When the market sells off, they pare their exposure. I can’t remember if there’s ever been a time in the history of this survey that they’ve ever gone short as a group. But when they get down to a very low net long exposure, like we’re seeing just recently, that’s a sign of a market bottom. Now, I want to emphasize a bottom, not the bottom, and that’s an important distinction. Bottoms happen a lot of the time, even in a downtrend. If you look back at the 2022 downtrend, there were several times when you’d say, “Oh, that’s a bottom. Oh, that’s a bottom. There’s another bottom.” But it wasn’t the final bottom until it got to the final bottom. So, when I say a bottom, don’t start thinking that we’re all done with the bear market because we’re not.
Jim Puplava:
So, what we’re seeing right now is what you would call a bear market rally, then?
Tom McClellan:
Yeah, we’ve reached an oversold, extreme, overly pessimistic sentiment state where the sell-off and the worries about tariffs and stocks getting run and China is not going to talk to us and the sky is falling and we’re all going to die—I tell you, when all that starts to become the dominant focus of discussion, then you get a bottom, and the market rallies back and resets itself. The bungee cord gets a little bit less stretched, and that’s the process we’re in. Now, there’s still more bear market to come.
Jim Puplava:
All right, well, I’m going upstairs. I’m going to jump out the window.
Tom McClellan:
Don’t do it unless you’re on the first floor, okay, or there’s a swimming pool.
Jim Puplava:
Let’s go to the second one. Put-Call Volume Ratio 5-Day Moving Average. High Readings in 2022 Bear Market Did Not Stop Decline. So, let’s talk about that one.
Tom McClellan:
So, this is saying the same thing. The put-call volume ratio measures how much volume is traded in put options versus call options. A put option is a bet on prices going down. A call option is a bet on prices going up. So, when there’s more trading done in put options, that’s a sign that everybody thinks the market’s going to go down. When you get up to a high reading, especially on this smoothed version that looks at a five-day moving average of each daily reading, that’s usually a really great bottoming indication, especially if you’re in an uptrend. But the rules in a bear market are different. Notice in 2022, we had some high readings that marked a bottom but not the bottom. And that’s actually one way to know that you’re in a bear market: if you see an oversold indication like this, and it doesn’t immediately turn into a strong new uptrend, that’s a good sign that you are in a bear market. We don’t have that confirmation yet, but that’s how I expect we’ll be interpreting this one this time because we’ve gotten a very big oversold extreme just to kick off the bear market. The bears did a lot of their work early. Now they’ve got to spend some time going sideways, waiting for the trend to catch up. But there’s still more time for this bear market. We’ve just had an oversold extreme within it. We are due for a bounce, which we have seen, and there’s a little bit more bounce going on as we speak in the week of April 24. As China says, “Oh, we’re not talking,” but Trump says, “Oh, we are talking,” and maybe that’s going to mean good news and sunshine and rainbows for everyone, but probably not because liquidity is still a problem this year. But even in a bear market, you can get an oversold bounce, and they can be quite exciting.
Jim Puplava:
Well, let’s talk about your next chart, which is a log scale of crude oil. We got down to about $56 a barrel in April, and we are currently, on the day we’re speaking, we’re over $62. What’s this chart telling you about the direction of oil?
Tom McClellan:
Well, this chart does a fun magic trick. It reveals how the movements of crude oil prices 10 years ago tell us what the stock market is going to do now. I discovered this a little over a decade ago just when I was playing around with long-term data. Notice that the chart pattern of crude oil going back to the 1890s looked a lot like the chart pattern of the Dow Jones Industrial Average. So, I put them together, and it wasn’t very satisfying when I looked at it in real time together. It took a little bit more playing around with it and shifting the data forward, and I realized the movements of crude oil prices give us about a 10-year leading indication for what stock prices are going to do. So, this is part of the thesis of us being in a bear market now because we’re supposed to be in a bear market now. Crude oil prices peaked back in June of 2014, and so, if the 10-year leading indication had worked perfectly, we would have peaked the stock market in June of 2024. We didn’t because everybody was excited about Trump getting reelected, and he was going to come to office and fix everything. And now they are realizing that he has come into office, and he is fixing everything, and, oh, that’s really not as good as we thought it was going to be. And so, we’re finally getting the delayed start of the bear market that was already due to happen. It’s been baked in for a decade that this was going to happen, and it’s likely to last, according to crude oil, until January of 2026. That would be the 10-year echo point of oil’s price bottom in January 2016. I have other leading indications that say November of 2025, which is just a couple of months’ difference. And it’s important to know that this leading indication doesn’t always work out to exactly 10 years. I’ve highlighted some of the dates of the turning points in there, and it’s not exactly 10 years. It’s also something that gets thrown off every once in a while when we have a war. Like in 1990, the Iraq War caused a big doubling in crude oil prices briefly, and then they went away. We didn’t get an echo of that in stock prices. That was an anomaly. And so, by in a similar fashion, I think that the oil price crash down to zero back in 2020—I don’t think that’s going to be fully echoed in stock prices when we get to 2030. You just kind of put your thumb over that as an anomaly. But generally speaking, the path of crude oil is a roadmap for what the path of stock prices is going to look like. And we are in a bear market now because we’re supposed to be in a bear market now. And we have to wait until the proper amount of time goes by before we get to a great bull market. And there is one coming next year. It should be a great bull market. But you don’t want to invest in April of 2025 for what the stock market is going to do in 2026. You want to wait till the right time.
Jim Puplava:
Tom, let’s go to another sector. I want to talk about interest rates. We’ve seen rates back up. There was a big hiccup where the 30-year got almost to 5%. The 10-year was almost at 4.8%. Trump reversed some issues on the tariffs, and then all of a sudden, the rates came down. But they’re still holding pretty firm.
Tom McClellan:
They are. And people who trade bonds can be just as silly in the brain as people who trade stocks. And so, they overreact to every piece of news and get a little bit tense and not sure what to do. That happens in the bond market, it happens in the gold market, it can happen in the crude oil market—it happens in any market because we all have caveman brains, and we get fearful based on what the news is. Generally speaking, if you’re in an economic depression like we are in now already—it just hasn’t shown up in the GDP numbers—generally speaking, there is less demand for credit, meaning companies are not going to borrow a bunch of money to build a new factory and hire a bunch of people in an economic recession or depression. And so, you don’t have as much competition over the money to be invested in bonds. And that makes yields go down. And so, that should be the expectation. The thing to know, though, is that long-term bond yields tend to follow the movements of gold prices about 20 months later. And so, this big rally that we have seen in gold prices from below $2,000 to now up to $3,500, that is due to get echoed next year in interest rates if it works like it always has. That’s not the immediate concern for bonds right now. But in 2026, I would look at bonds as not being a great place to be an investor because rising inflation and rising competition for all that invested capital is going to be making it a tough place to be in bonds. It’s going to be a great place to be in stocks in 2026, but in 2025, you can still get by and T-bill and chill on your 4% for a little while longer. I wouldn’t really get all that excited about the long-term end of the bond market right now because you have that wave of inflation and competition for capital coming next year. And so, bonds are not a great place. But you don’t have to exit them right now if you’re in a long-term bond position. But there will be a time when that’s the right thing to do to get ready for next year’s big bull market in stocks.
Jim Puplava:
I want to move on to the area of gold. You know, two back-to-back years, we had double-digit gains for gold last year, same this year. Where do you see gold going from here?
Tom McClellan:
Gold is in a blow-off up move, which is part of gold’s nature. The physics of gold price movements are different than other markets. And this is an important psychological thing to understand. People panic out of stocks and into cash. And for that reason, stock prices tend to make rounded tops and spike bottoms because the panic produces the spike. But people panic out of cash and into gold. And for that reason, gold tends to make rounded bottoms and spike tops. The spikiness tells you about the direction of panic. There’s a panic going on in gold, not just by average investors, but by central banks around the world. And central banks are run by humans with caveman brains too. And they make irrational decisions, but they make them with a lot of money. You know, you’re talking about big elephants stampeding when you’ve got the central banks all deciding to buy gold, and they are buying gold like crazy right now. But they can reverse course on that if they decide to. We saw back in 2001–2003, Great Britain decided, when gold was about $325 an ounce, that there wasn’t much point in holding on to this gold. So, they sold off all their gold holdings and pushed gold prices down to about $260 an ounce. That’s a cute little number, $260. And now, central banks as a group have reversed course on their sentiment, and they’re all buying. But that doesn’t mean that it has to last forever. We are seeing a spike move up in gold. And the thing to know about spike moves in gold is, once the top comes—and you don’t know when it’s going to come—the down move out of a spike blow-off top in gold tends to have a slope that matches the up move. So, the down move can be quite dramatic, just like the up move was. The fascinating thing right now that we’re seeing in the precious metals, though, is that silver has not gone along for the ride. Silver is not at an all-time high like gold is. It’s not even making local highs. It’s been acting the opposite of gold lately, which is very strange. It’s not how precious metal markets are supposed to work. It’s very unusual. That tells us that this really is a central bank-driven rally in gold, not an investor rally like the 1970s was. This is all about what the central banks are doing. And so, if you’re going to hitch your wagon to what the central banks are doing, understand that they are big, and they can reverse course instantly, and they won’t tell you when they have done so. So, it’s really not a great game to try to play.
Jim Puplava:
So, given the current trend, would you expect higher prices from here?
Tom McClellan:
No. In fact, I turned bearish this week based on getting the downturn that we saw, and I’m expecting further decline. The McClellan Price Oscillator for gold—the closing gold prices—got up to a ridiculously high level, and it rolled over. That’s a sell signal in my book. Even though we’re seeing a little bit of a rebound after the initial down wave, I’m expecting more downward movement for gold prices in the next days and weeks.
Jim Puplava:
From where we stand today, how far could that go?
Tom McClellan:
I try not to deal in the “how far.” I try to get the direction right, get the “when” right for the turning point. And if I get those two things correct, then the “how far” will take care of itself. It’s a natural human thing that we always want to count our chickens and know, “How much money am I going to make, or how much money am I going to lose? How far is it going to go?” That’s very natural that our brains want to work that way. But that’s not really how the market works. The market deals in the “which direction” and the “when” for when it’s going to end. The magnitude gets affected by things along the way, and it’s not predetermined and not in ways that I can figure out.
Jim Puplava:
So, as you’re looking at this market, and you expect we’re going to be in a bear market maybe to later on this fall or maybe early next year, is there anything that looks attractive to you here?
Tom McClellan:
I think that corn prices are going to go higher, and wheat also. And so, if you have to be invested in a stock, I look at stocks of fertilizer companies because when corn prices and wheat prices go up, farmers do something interesting. They tend to buy more fertilizer to try to maximize their return on their planted crops. They tend to spend less on fertilizer when crop prices are low. So, in a rising corn environment, a company like Nutrien—they make potash—it’s a very boutique company. I own shares of it myself, so I’m talking my own book here. They tend to do well when corn prices are going up, and it’s lagging a little bit. So, I think it’s got some catch-up to do. That’s if you have to be invested in stocks.
Jim Puplava:
All right, well, listen, Tom, so you expect we’re in a bear market here at least.
Tom McClellan:
Oh no, Jim, I’ve got to slap you on the wrist. You can’t use that word. “Bear market territory” is just a silly term. Everyone should let go of this whole idea of down 10% is a correction, down 20% is a bear market. We’ve been in a bear market ever since the first downtick from the all-time high made in February. The whole thing is a bear market. And so, everyone should let go of that term about bear market territory or correction territory. But please, I’m sorry to interrupt you, but please go on with what you’re saying.
Jim Puplava:
Well, I stand corrected then. So, we’re going to be in this bear market, you think, probably to the end of the year, November, possibly going into the first quarter of next year. And when you’re looking at this taking off next year into a new bull market, what do you think is going to be the catalyst? Is it going to be Fed rate cuts? Is it going to be stimulus, maybe the Trump tax cuts? What would that be, do you think?
Tom McClellan:
That’s an excellent question. I think that any action by the Fed is more likely to amplify the trend change than it will be to cause a trend change. These things just take the time that they take. And I don’t know what the magic is in crude oil’s message for stocks. I share the chart showing how stock prices echo the movements of crude oil prices 10 years later. Somehow, for the last 120 years, crude oil prices know what stocks are going to do 10 years later. I cannot explain the magic, but there is magic in it. And it says we’re going to wait until the end of 2025, early 2026, and then we should start a roaring rebound. I think that a lot of what the psychology is that’s playing into this is that when you have a new president—and I realize this is Trump’s second term, but he’s effectively a new president because he’s coming in and trying to change everything that his predecessor is doing—during the first year or two, a new president tries to change everything. And he goes around declaring that, “Oh my gosh, things are even worse than I told you.” And the only solution is whatever he’s proposing to do or whatever he wants Congress to do in terms of spending or tax cuts or tax increases. And people get bummed out hearing things are worse than they’re supposed to be. And so, they don’t want to be investors when they are hearing that, and when that’s the attitude, generally speaking, that tends to last until about the midterms. And then, during year three and year four, a new president will typically go around declaring victory for having solved all the problems. And “won’t you reelect me?” Trump cannot get reelected, although he’s now selling Trump 2028 hats already just to poke people and make some fun of it. But that’s generally how it works. In the first two years of a presidential term, presidents try to fix everything. And that’s terribly chaotic and disruptive. And we’re going through that. Normally, that lasts until just before the midterms. I think it’s going to last less long this time because Trump is much more of a “get it done now and let’s move on” kind of guy. And so, he’s getting more stuff done in the first year than normal stuff that would have normally dragged out into the second year. He’s getting it all done now. And so, I think that’s going to truncate the time of the bear market and get it done earlier. And that’s what supports the idea of a January 2026 bottom for stocks, approximately that timeframe, anytime between about November 2025 to March 2026 is a likely time for that bottom to actually arrive. So, as we get closer, I’ll try to refine the date of when it’s actually arriving.
Jim Puplava:
Well, the nice thing, Tom, unlike, let’s say, the last bear market, we actually have yields that we can sit on the sidelines in. I mean, money market funds are close to 4%. I mean, it’s hard to believe, but you go back five years ago, interest rates and money market funds were zero.
Tom McClellan:
That’s true. And it’s nice if you’re a saver. It’s not so nice if you’re Secretary Bessent of the Treasury, having to refinance—I don’t know, is it $9 trillion worth of debt this year? He’s got a lot of debt to roll over, and it’d be nice if the Fed would cut rates and get all the rates down so that we could refinance the public debt at a lower rate. But it is indeed nice for savers.
Jim Puplava:
Well, at least it’s something there. So, overall, you expect this bear market to last pretty much most of the year until catalysts change. So, in the meantime, being on the sidelines in cash, not a bad idea.
Tom McClellan:
Yes, that’s true.
Jim Puplava:
All right, well, listen, Tom, as we close, tell our listeners how they can follow you, if you would.
Tom McClellan:
Well, take some of that cash off the sidelines and invest in our newsletter. Go to mcoscillator.com. We have a twice-monthly newsletter that is now entering its 31st year. My dad and I have been writing it together for the last 30 years. We also have a daily edition that comes out every day the market trades, and if you don’t want to spend money, we have a free weekly Chart in Focus that you can sign up for. It comes to you by email. It’s just one chart and one article every week of something that is interesting to us that we look at. It’s a way to get more people acquainted with our work. No strings attached. We won’t spam you. We won’t sell our email list to anybody at any time. We never have. And that’s kind of a golden rule thing with us. I don’t like people selling my email address, so I won’t ever do that to anybody, any of my customers, or anybody I have a relationship with. Go take a look at mcoscillator.com, and there’s a lot of good information there.
Jim Puplava:
All right. Well, listen, Tom, as always, a pleasure speaking with you, and come back and talk again.
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