This is a great piece from the desk of Tom Bruni @brunicharting
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Approaching Tactical Bounces In Bear Markets
Expert technical analysis of financial markets by JC Parets
by JC
This is a great piece from the desk of Tom Bruni @brunicharting
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Approaching Tactical Bounces In Bear Markets
by JC
Going country by country all over the world is one of the best tools that we have as market participants. The value that I’ve gotten over the years from looking at the behavior of all of the countries, instead of just the U.S. is a huge factor in why I am such a top/down weight-of-the-evidence guy. There are signs of strength and weakness that we see from international markets that might not be so obvious in the S&P500, for example.
Last September, I promise you that the reason I got bullish tactically was not because of what I was seeing in the United States, but what was happening around the world. There were simply too many bullish momentum divergences and downside objective achieved internationally to ignore. Something was up, and in fact, the counter-trend rally that we got in the U.S. actually exceeded my expectations.
by JC
The big level that I’ve been watching in S&Ps has been that 1880-1890 area representing support in August and September, which was also resistance back in early 2014. To me, this has been the big line in the sand. I see no reason to be short this market if prices are above those levels, and we’re finishing up the week above it. So now what?
Structurally speaking, I don’t think it changes anything bigger picture. We are still in a downtrend in U.S. Stocks as the weight-of-the-evidence suggests that we ultimately head much lower. We saw more new 52-week lows on the NYSE this week than we did at the August lows, an expansion in weakness, in other words. Financials have collapsed on a relative basis, hitting fresh multi-year lows [Read more…]
by JC
A big reason why I’ve been bearish towards the U.S. Stock Market is because I’m in the weight-of-the-evidence business and globally stocks have been getting crushed. It was only a matter of time before the selling came to the United States Index. A good example of a broken market making new lows is India’s Nifty Fifty Index. [Read more…]
by JC
That was fun wasn’t it? S&Ps lost a cool 13% since the last week of 2015. You think that’s a lot? Emerging Markets lost 16% during that period. The Russell 2000 Small-cap Index lost over 17%. Micro-caps lost over 18%. 13 is nothing. And get used to it, because I think there is a lot more selling coming.
Today, we’re going to focus on what the S&P500 looks like because that is what all of you keep asking me about. I like to look at stock markets from a more global perspective, taking into account what other asset classes are doing like commodities, currencies and interest rates. Remember, I’m in the weight-of-the-evidence business. I believe that in order to navigate through what is a constantly evolving global marketplace, taking the weight-of-the-evidence is the best approach. But today, we’ll take a deep dive look at S&Ps on their own. [Read more…]
by JC
While everyone is making a big fuss about S&Ps making new lows, or Oil hitting new lows, or the amount of stocks in the NYSE hitting new lows, believe it or not, there are plenty of things making new highs. So although we’ve been bearish towards the U.S. Stock Market for months and could not be happier to see stocks continuing to sell off, today I want to focus on something that is making new highs.
This is a 20-year chart of Gold relative to the CRB index. This index is comprised of 19 Commodities including Crude Oil, Copper, Corn, Sugar, Gold etc. We consider the CRB to be the benchmark for the commodities markets [Read more…]
by JC
Today I want to point to a chart that a really smart friend of mine has been sending me for months. He prefers to remain nameless, you know how these sell side guys roll, so we’ll just call him Mr. T. In this Chart, Mr. T has been telling me since the Fall that the Regional Banks vs REITs ratio is suggesting that U.S. Interest Rates are heading lower, specifically the U.S. 10-year yield.
On the top frame, we’re looking at the Regional Bank Index ETF $KRE over the REITs Index ETF $IYR. In this case, the numerator, Regional Banks, do relatively well when the market thinks rates will rise, while the denominator, REITs, do relatively well when the market thinks that rates [Read more…]
by JC
From the desk of Tom Bruni @brunicharting
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Telecom Threatening A Structural Breakdown
When I read about the Telecom sector or speak with colleagues about it, I find many people often think of it as a collection of companies with strong balance sheets, great cash flows, and shareholder friendly actions like juicy dividends and share buybacks. While that may be true in many cases, that doesn’t necessarily mean that the sector can be utilized as a bond proxy to boost a portfolio’s yield. As we saw in recent years with sectors exposed to high-yield, and MLPs, there’s no such thing as a free lunch. In addition to that, simple math shows that Telecom hasn’t been correlated with bonds (TLT) at all over the past ten years, with the correlation being 0.29, 0.19, and 0.08 over the past one year, three years, and ten years, respectively.
If you had adopted the above philosophy, stuck this sector in your portfolio and hoped for the best, you’ve seen that [Read more…]