Topping Off 2019

JC Parets
December 31, 2019

From the desk of Tom Bruni @BruniCharting

Typically on Tuesdays, I post a Mystery Chart, but I expect participation to be lacking this week and I've not found a chart I think is worthy of the exercise...I don't want to make it too easy on you guys.

Instead, I want to look at a few charts that are all suggesting we may be due for a period of consolidation over the next few weeks.

One of the primary ways we identify near-term trend reversals is by looking for stocks or indexes with momentum readings that are diverging from price. Sometimes those readings are even paired with a failed move, providing confirmation that buyers/sellers have taken control and creating a clear level of support/resistance to trade against.

Today we're seeing a lot of our upside price objectives met with momentum diverging, suggesting some consolidation into the first few weeks of the new decade would be a reasonable expectation.

Here's the Developed Markets Ex-North America ETF. Still above support at ~68, but momentum has been diverging and continues to.

Click on chart to enlarge view.

Taiwan meeting our upside objective as momentum diverges.

Switzerland, no momentum divergence but it is meeting our upside target after a nice run.

Software...meeting our upside target as momentum diverges.

Financials above their former highs...but momentum is waning.

Equal-Weighted Industrials...new highs on weaker upside momentum.

Consumer Staples...meeting our upside target as momentum diverges.

Homebuilders stuck below their former highs as momentum diverges.

Biotech failing at its 2019 highs as momentum diverges.

Healthcare Providers doing the same.

Healthcare as a sector meeting its upside objective as momentum diverges.

We've had a great run over this quarter and many of these charts look great from a structural perspective, but tactically the reward/risk is not what it once was. We're watching to see how these divergences resolve themselves...through time, through price, or both.

Wishing everyone a safe and happy New Year's Eve and many great things in 2020! See you all in the next decade!

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Thanks for reading and please let us know if you have any questions!

Allstarcharts Team

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