It’s the end of the month so you know what that means: Brand new freshly completed monthly candlesticks for us to review. While I normally use weekly charts to get structural perspective on markets and then daily charts for tactical purposes, the monthly chart review is done at the end of each month to help identify the primary trends around the market. This is for us who want to avoid the day to day noise surrounding politics or the Fed or whatever news story is being sensationalized this week.
Precious metals are in a downtrend. There is no question in my mind that prices have been heading lower, not higher. We had a beautiful counter-trend rally in the first half of last year and we took full advantage of that from the long side. But our upside objectives were hit in the Summer. Since then it’s either been a short or neutral in terms of positioning. At this point we want to continue with this approach and mindset within this group of securities – both the stocks and commodities. Long positions here make little sense to me from any sort of intermediate-term horizon.
Chartered Market Technician and author of The Daily Gold, Jordan Roy-Byrne invited me on his Daily Gold Podcast last week. We discuss both the short-term and longer-term implications of the behavior of the metals market lately. This is the Gold post he references throughout the interview. [Read more…]
This is a global market environment. The S&P500 goes up and down based on the collective money flow from investors all over the world, not just within the borders of the United States. There are some people still fighting the civil war who simply don’t understand this concept. US Stocks don’t move up and down based on what is happening in America. What happens in the United States politically, economically, tax-wise, etc is just a tiny tiny piece of a humongous puzzle. This is a global market environment and the sooner you recognize that the bigger the advantage you will have over others who have not yet accepted this concept.
Even if you only trade US Stocks, or stocks local to where you live, understanding what is happening globally is essential to recognizing the direction of the underlying trend for the asset. And this trend identification is step 1 to market analysis. Today I went through every stock market index in the world to see if there is more good or more bad out there. Here are a few stand outs:
(click charts to zoom in)
It’s hard being a gold bug. They rarely ever get to be right. But why don’t they ever change their mind when the data changes? I don’t get it. There is nothing wrong with being bullish gold, but there is something wrong with always being bullish gold. [Read more…]
This is one of my favorite exercises. We want to recognize that we as human beings are terrible investors. It’s not our fault, it’s just how we’re built. So to overcome that we first to be aware of it. This alone puts you in the 1% and gives you a huge advantage over others who are not aware. To further help ourselves, we need to avoid letting our other biases affect our judgement. This is almost impossible. [Read more…]
My weekly run through the S&P500 components is one of my favorite parts of the work week. I put on some music and go through all 1000+ charts. Remember we use the weekly charts to get structural perspective and then the daily timeframes to define more tactical opportunities: 2 charts for each of the 500 stocks. I then break down the index into 11 Sectors and run my analysis of stocks one sector at a time. This way it helps give me a better feel for that particular area within the entire stock market. To take it one step further, I then break down each of the 11 sector workbooks of charts into sub-sectors. So for example, in the “Energy Sector” there will be 4 sub-sectors: Integrateds, Services, Exploration/Production and Refiners.
The reason I’m really pressing this process lately is because of just how sideways the market has been for U.S. Stock Indexes. In order to get clues as to which way this consolidation will revolve is to look under the hood and see what’s going on. Does the body have some strong organs left to keep it alive, or is this it? You can’t just look at a car or look at a person and be able to properly diagnose the problem, or the good health for that matter. You need to open them up and take a good look. A mechanic is an expert at analyzing the car, the Doctor knows the human body and we as market participants need to understand the insides of the market. [Read more…]
Here is the video recording of the May 2017 Monthly Conference Call for Members Only
In the call we discuss:
- Stock Market Breadth Deteriorating
- The Rest Of The World > US Stocks??
- What Intermarket Relationships We’re Watching
- International Indexes
- US Indexes, Sectors and Stocks
- Commodities, Currencies and Bonds
- Follow Up This Week With S&P500 Stocks Research Report
We live in a world of if/then statements. That’s just the way it is. I don’t know what’s going to happen tomorrow, or next month or next year. But that’s okay because no one else does either. That whole lie about “uncertainty” is just that: a lie. There is always uncertainty. That’s the point of all this. So we do our best to put together a road map filled with if/then statements. If the market does this, then we will do this. If that market does that, then we’ll have to do that. This is the case today, it’s been no different in the past and will likely be the same in the future. I don’t know of any other way to manage risk responsibly.
These if/then statements are always changing, of course. The big question mark today is whether or not the U.S. Stock Market will begin to see an improvement of breadth, or if the deterioration will continue. In the past I’ve outlined some of my favorite breadth measures. Most of these are not confirming the new highs we’re seeing in the S&P500 this week. But that statement is not fair on its own. The word “yet” needs to be added to the end of that sentence. That’s how this works. [Read more…]
When we talk about “stocks”, it can be in reference to many things. Most people like using something like the S&P500 or Dow Jones Industrial Average as a gauge because those are the popular United States indexes which contain many of the world’s largest companies. That’s fair. Depending on what country you live in, your interests are likely to be on your local indexes while you also keep an eye on maybe the United States and/or European Averages. I think it’s important to understand that while these indexes are made up of companies based in local economies, the investors that own those stocks come from all over the world. We live in a global marketplace and I think it would be irresponsible of me as an investor to ignore that.
There are a lot of tools I use to measure the strength or weakness of the overall stock market environment. One of my favorites is a global index I created where I equally weight the largest 10 stock markets in the world. Each country represents 10% of the Allstarcharts Equally-weighted Top 10 Global Index $GLOBE. It includes both Emerging and Developed Markets. So you’ll get Japan, London, Europe, Canada, US but also Brazil and India for example. The entire list is on the chart below: [Read more…]
Every month I host a conference call for All Star Charts Premium Members where we discuss ongoing themes throughout the global marketplace as well as changes in trends where new positions would be most appropriate. This includes U.S. Stocks & Sectors, International Stock Indexes, Commodities, Currencies and Interest Rate Markets.
We had been implementing a much more neutral approach towards equities and even most commodities since early March. This strategy worked well as many stocks, sectors and countries were in a sideways mess. Over the past week or so I believe things have changed and there are plenty of risk vs reward opportunities on the long side that we’ve outlined in recent letters.
I’ll do my best to lay out my weight of the evidence conclusions and walk you step by step with how I got there! It will be held on Thursday May 18th at 7PM ET. Here are the Registration Details: [Read more…]