It’s hard to ignore certain market moves that tend to be very rare. Bullish outside days that engulf the prior period are one of those. I think this is exactly what we saw this week in the AMEX Arline Index and it is something we want to respect. This is especially the case if you consider where this bullish reversal took place, just below important support. [Read more…]
Intermarket Analysis is a fantastic tool that is available to us as technicians regardless of our time horizon. Certain gauges of risk appetite, or risk aversion, can be seen simultaneously throughout various asset classes. We use these correlations as confirmations or divergences from data we’re getting elsewhere. Today I want to focus on the direction of the U.S. Interest Rate Market and compare it to the data we’re getting from Regional Bank Stocks and Real Estate Investment Trusts. The relationship between Banks and REITs is similar to the tug of war going on between investors in the Bond Market. [Read more…]
I’m lucky in that I learned early in my career that we’re in a global market place. The United States, while it is certainly important, is just one country within a massive interconnected global market. We see this more and more every day. Many choose to focus on US Stocks, and that’s fine. But I think even if that’s the case, approaching the market globally is not only an advantage, but becoming more of a necessity with each day that passes.
Today I want to share a chart that really tells an interesting story about what is actually happening in stocks around the world. I’ve taken the 10 largest exchanges in the world, including both developed and emerging markets, and equally-weighted each of them to create an All Star Charts Top 10 Global Exchanges Index. You can see embedded in the chart, the exact list of components: [Read more…]
While so many people seem to be focused on the major US Indexes like the S&P500 or the Dow Jones Industrial Average reaching the irrelevant 20,000 level, I prefer to focus on individual stocks and sectors. There are areas of strength, like Technology obviously, and areas of weakness like Healthcare and Consumer Staples. Stocks are like investors, there are winners and losers. I prefer to be a winning investor focused on winning stocks, wouldn’t you? Today we’re taking a look at Technology as it quietly breaks out again to new highs. [Read more…]
I love technical analysis. I really do. There’s no question that finding a nice chart brings a great amount of joy to my life. Today I want to share with you what I think is one of the most important developments to occur over the past couple of months. Interest rates have been ripping higher, yes we know this. But to me it’s what is happening in Banks and Real Estate Investment Trusts that continues to grab my attention. These groups of stocks are doing the exact opposite today that they were doing at the beginning of 2016, when I was pounding the table about rates going a lot lower.
Interest rates have exploded higher into year-end from a low near 1.37% on the 10-year yield up to over 2.6%. But one of the big reasons that had me so bullish rates since July was that while the 10-year was making lower lows into the summer, the ratio between Regional Banks and REITs held the early 2015 low and started to rally: [Read more…]
One of the more impressive moves that we’ve seen in 2016 is in the Industrial space. While we came into the year near multi-year lows on a relative basis (XLI/SPY), we entered December hitting new all-time highs relative to the S&P500. You want to talk about a dramatic change in relative strength? This is something we take very seriously, and definitely not something to ignore. We also want to keep in mind is that this relative strength started well before any election, US or otherwise. This got going in January.
Today we’re taking a look at the largest component in the Industrial sector: General Electric $GE, a stock that broke out earlier this year above a downtrend line from the all-time highs in 2000 and is still 30% below the 2007 highs. I think this is where we want to be looking: [Read more…]
Last week I shared with you guys a “Mystery Chart” without any labels on it. The point of this exercise is to eliminate any biases and focus only on facts. The only truth in the market that we can count on is price. Sell side analysts are going extinct because they offer little value, the media is often either wrong or lying to you, the same can be said about C-level executives, and the list goes on and on. None of these people are reliable. This is why the only thing we can count on is price. It’s just math. So we prefer to focus on that and ignore the rest of the noise.
Today we’re looking at a rare development in economically sensitive assets that I think have much broader implications for stocks and commodities moving forward: [Read more…]
Every now and then I throw out a mystery chart just to get us thinking. Not knowing what a chart represents helps eliminate biases or any ideas we may already have in our heads. Today we are looking at what I think is one of the more interesting developments in the market today. [Read more…]
Throughout the second half of 2016 I’ve remained in the camp that interest rates are going higher and that bonds are a fade. The action into 4th of July weekend originally put me in that camp and I continue to believe that, bigger picture, this is the underlying trend that we need to respect. The catalyst here, in many cases, is becoming more and more clear with each passing day. Forget the economy and the stock market, inflationary forces are moving in sync with the bond market suggesting a very high correlation between the inflation trade and higher rates.
Let’s break this down using math and blatantly ignore anything the federal reserve has to say. Listening to them has been a time waster and money loser for years. I don’t expect this trend to change any time soon. I’m sure they are nice people, but from a portfolio construction perspective, they offer absolutely zero value, and some might argue that listening to the fed is actually detrimental to a sound investing plan. I agree with both the latter and the former: that noise is toxic on all accounts. [Read more…]
You guys know that I consider the S&P500 to be just one index in just one country in just one asset class in the entire world. There is a lot more out there. And while this might be true, I would also argue that this one index is one of the more important ones that we need to be watching. It is a good representation of U.S. Stocks, since the Dow Jones Industrial Average is just 30 names, the Nasdaq is tech-heavy and the NYSE Composite has a lot of international exposure. One can argue that the Russell3000 is the best representation of the U.S. since it represents over 98% of all investable assets in U.S. equities, but there is no liquid asset to gain exposure to it.
So today we are breaking down the S&P500, setting price targets and defining our risk management levels: [Read more…]
It’s important to recognize what type of environment we’re in for the market. During different times of the year, traders and investors tend to behave in certain ways. When you smooth out the data over many years, their patterns become clear. We all hear about, “Sell in May and Go Away”, but what about, “Remember to Buy In November”?
Today we’re focusing in on the end of what is historically the worst seasonal period of the year for the Dow Jones Industrial Average. So what happens next? [Read more…]
The headline writers do their best to make you think that Gold is a US Dollar story. But in the real world, the one we’re all forced to live in, Gold is a Gold story. It really has nothing to do with the US Dollar, and if you price gold in the other currencies, you’ll see that very quickly. While gold might be struggling when priced in US Dollars, if you look at it priced in a weaker currency, say emerging markets, you’ll see a completely different picture.
Today we are looking at Gold priced in an equal-weight basket of Emerging Market Currencies, specifically the BRICS: [Read more…]