Expert technical analysis of financial markets by JC Parets
by Tom Bruni
From the desk of Tom Bruni @BruniCharting
We’ve been looking for breadth and momentum divergences to be confirmed both in the US and globally to mark the start of “the bottom” in equities as an asset class, so today I want to highlight the breadth of one sector which provides perspective on the current market environment.
by Tom Bruni
From the desk of Tom Bruni @BruniCharting
Momentum and breadth diverged slightly in the major indices and many global markets, leading to a short-term bounce that’s been sold into so far. Today I want to look at sector breadth to highlight the extent of the weakness under the surface and outline what we’re watching for if/when prices retest their late October, and potentially Q1 lows.
by JC
We look at markets globally because that’s what they are, global markets. The weakness in stocks around the world throughout the first couple of quarters this year was a heads up that something was wrong. We did not see the rotation come in, like we had seen so consistently after any sector went through a period of underperformance. Rotation is the lifeblood of a bull market. Money did not flow back into foreign markets, and as it turns out, it was that the U.S. was the last man standing. [Read more…]
Ok, I’m on an airplane on my way to San Francisco to present at a conference and to hang with our boy JC, so please forgive the liberties I took with the title of this trade plan. Clearly I’m showing my age…
But seriously, the materials sector is offering us some nice premium to put a fast income trade on into the holidays. [Read more…]
by JC
I learned a long time ago from one of my early mentors, “Don’t Fight Papa Dow”. In other words, this is the most important index in the world. When someone asks you what the market did today, they’re wondering how the Dow Jones Industrial Average closed for the session. Some people would argue that the S&P500 is more important because it represents 500 stocks, rather than just 30 from in the Dow Industrials. But by that logic, the Russell3000 should be most important because it represents 98% of all investable assets in the U.S. equities market, and contains 3000 stocks. But most non-professionals don’t even know the Russell3000 exists. Also, if you overlay the Dow Jones Industrial Average over the S&P500, they move together.
If you get the Dow right, you’re likely to get the direction of S&Ps right as well: [Read more…]
Until stock markets sound the “all clear” signal and we can get back to our regularly scheduled bull market, we have to operate with a different set of rules in order to protect our capital — both money and mind. Corrective or Bear Markets require a different set of tools. And it’s not just knowing that the odds more favor short direction plays versus long direction plays, it’s knowing that you have to manage open risk differently. You have to structure trades differently. And you have to operate in shorter time frames.
Down markets can be incredibly profitable for nimble traders. In fact, in my 20-year career, my most profitable years ever were 2000 and 2001 when we were on the backside of the Spring 2000 “dot com” bubble where NASDAQ dropped a dramatic 78%!! [Read more…]
Honestly, I never thought a uranium play was something that would ever come across my desk, but a week ago JC published a piece highlighting the uranium space as displaying bullish turnaround characteristics — which offers a nice portfolio diversification to many of us who are mostly positioning for the downside in equities right now.
As I’ve let this idea marinate in my head over the last week while watching declining volatility make long options more attractive, I’ve really warmed up to the risk/reward profile in this space and have identified a great way to position for exponential gains in the Global Uranium ETF $URA. [Read more…]
It’s been quite a bounce in the markets since the end of October. And we expect to see many more such bounces in the days and weeks ahead as market participants battle to find equilibrium in a tape that has definitely been thrown off balance since early October’s swoon. The thing is, our bet is that we’ll see even more impressive bounces — but from lower levels.
Our new regime thesis hasn’t changed (yet), and as such, we view any bounces as great opportunities to establish new short positions in the weakest names in the market. And one of those weak names that we’ve been stalking is JP Morgan $JPM. [Read more…]
