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.
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.
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:
Yesterday I kept a Diary throughout my entire process of reviewing the components of the S&P500. Many of you have written back with such nice things about that. I'm glad you enjoyed it. I think that in order to get the most out the research, it really helps to understand where I'm coming. This helps in the execution process, which is why we're here right? To make money in the market for ourselves and/or for our clients.
Today I felt that a nice supplement to yesterday's S&P500 work is a chart that shows what the S&P500 Equally weighted Index is doing relative to the S&P500 Market-cap weighted index. To me this is a good measure of whether or not we're seeing broad-based participation or if it's just the mega-cap names carrying the weight.
We've been able to avoid some short-term messy sort of action lately. We'll take it. The breadth internals of the market had been suggesting since early March that something was wrong. The major indexes breaking uptrend lines further emphasized those characteristics of distribution. Momentum putting in bearish divergences at the highs from Q4 and Q1 this year also pointed to more neutral positioning towards equities. Most of our upside targets had also been achieved by early March and that was difficult to ignore. It's a weight-of-the-evidence approach for me, there's no question.
Today we're going to make the bullish case for US Stocks. Not that I think we rip higher every day from here and we need to buy everything in sight, but I do think it's worth paying attention to the developments from early this week. I also want to pinpoint exactly what we want to see moving forward before getting full on aggressive towards US Stocks as we did in July last year and in late January before that.
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've been implementing a much more neutral approach towards equities and even most commodities over the past month. This strategy has worked well as many stocks, sectors and countries continue to be a mess. There are times to step on the gas and really push it, like last summer for example. But other times, it's best to sit tight and wait for things to set up in the direction of a trend. A sideways mess is no fun for anyone. That's what we're in right now.
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 Tuesday April 18th at 7PM ET. Here are the Registration Details: