Here’s something you don’t see every day.
European Financials hitting new 52-week highs? [Read more…]
Expert technical analysis of financial markets by JC Parets
by JC
Here’s something you don’t see every day.
European Financials hitting new 52-week highs? [Read more…]
by JC
Crude Oil futures are pushing up against new 3-month highs just as investors have given up on the commodities trade.
No one I speak to thinks Energy leads the way in the 2nd half of 2023.
And I speak to a lot of people who got the past year very right. Even they don’t believe…
Here’s what I see: Former resistance for Crude Oil in 2018 turning into support throughout the past year: [Read more…]
by JC
Technical Analysis is the study of the behavior of the market and its participants.
So while identifying price trends is our ultimate goal, sentiment plays an important role in that process.
Prices don’t move up or down because of “fundamentals” or “the economy”. The price of assets move based on positioning.
When investors are all positioned one way, and are at a consensus, who’s left to drive prices further in that direction?
Last summer we saw some of the most pessimistic sentiment towards stocks in history.
Some of that sentiment has started to shift a bit, like in the AAII and II polls. We’re back somewhere towards the middle in those. You need, at least, some bulls to buy stocks to have a bull market.
But when it comes to Fund Managers, Cash is still their largest position, and they’re most bearish on equities. [Read more…]
by JC
As bull markets progress you get regular sector rotation. We’ve seen that consistently since this bull market started over 13 months ago.
Another classic characteristic of bull markets is that correlations among stocks drop off dramatically.
You see, when volatility spikes, which tends to happen in bear markets, correlations among stocks shoot towards 1.
In other words, they move together. On “up days” most stocks all rise in unison. On “down days” they all sell off at the same time. Correlations are very strong during times of market stress.
In healthy market environments, however, which we’ve obviously been in for some time now, the opposite occurs.
Correlations fall off a cliff and head towards zero.
Here’s the 6-month correlation among S&P500 components dropping precipitously since last Fall:
And here’s a shorter time frame, the 3-month correlation.
Same thing.
Dropping hard since the fall:
And while all this is all perfectly normal, I think this next rotation we’re currently getting is likely to come with some selling in certain stocks and sectors.
Perhaps some well-deserved profit taking at some logical levels?
The back half of 2023 is likely to be filled with both long and short opportunities, as opposed to the relentless bid higher in stocks we saw during the first half of the year.
It’s been hard to make money shorting stocks in what turned out the be the greatest first half to a year in the history of the Nasdaq.
The S&P500 is putting up historic returns quarter after quarter.
Those are not good times to be looking for shorts. Quite the opposite, in fact. So we haven’t.
During the back half of the year, however, I think there will be plenty of both – longs AND shorts.
On this week’s live call we discussed shorts in $META and $NFLX. And there are more out there.
Premium Members can check out the full video replay here and download all the slides.
Give it a watch and then let me know what you think!
JC
by JC
We interrupt this raging bull market to update you on some historic positioning in the bond market that is sure to impact your portfolio, whether you like it or not.
Even if you don’t trade bonds, this is really really important.
You see, I know it’s easy to sit back and chill out with the S&P500 making new 52-week highs, the Dow Jones Industrial Average and Dow Transportation Average making new 52-week highs and, of course, the Nasdaq100 making new 52-week highs after posting its best first half to a year EVER.
Market breadth continues to expand and sector rotation is frustrating the hell out of anyone trying to short this market.
The thing is, what even changed?
What happened that stocks have absolutely been ripping higher since last year?
Positioning.
It’s not the economy that drives stocks. It certainly isn’t fundamentals.
It’s positioning. [Read more…]
by JC
This is the video recording of the July 2023 Mid-month Conference Call.
by JC
It’s hard for me to have a conversation about the stock market without bringing up what’s happening in bonds.
Think about it like this, the market cap of all US Stocks is somewhere around $40 Trillion. For the bond market it’s over $120 Trillion.
Volatility in bonds tends to trickle down to other asset classes, especially stocks.
US Stocks really got going in the 4th quarter last year, once the US 10-year Note stopped falling in price.
I don’t believe that was a coincidence.
But at this point, Large Speculators have on their most aggressive short position in bonds ever.
So in other words, what is historically the “dumb money”, particularly at turning points, are betting more aggressively than ever that bond prices are going to fall and rates will now continue higher: [Read more…]
by JC
These are the registration details for our LIVE Mid-month Conference Call for Premium Members of All Star Charts.
Our Live Call will be held on Monday July 17th at 6PM ET. As always, if you cannot make the call live, the video and slides will be archived and published here along with every other live call since 2015.
Here are the details for Monday night: [Read more…]