Today I want to talk about the non-randomness of markets. I think the Russell2000 Small-cap Index is a great example to walk through. For one, it helps you understand the way we look at markets, but selfishly it’s also great because it reiterates a lot of principles that I want to continue to focus on moving forward. Writing helps. Everyone wins. [Read more…]
Well here we are, the first “panic” of 2020. Markets are selling off a bit, the TV and twitter birds are chirping, trying their best to get you to act irresponsibly in your portfolio. And maybe you’re even feeling a bit of unfamiliar heat on some of your long positions. Time to get scared, right?
Maybe. I dunno. But this I do know — fear subsides. And in options trading parlance, volatility mean reverts. I’m stepping in and selling the fear today. [Read more…]
In case you missed it yesterday, we’re selling stocks up here and buying bonds.
I tried to outline the levels as best as I could. Let me know if you have any questions!
Quickly today, I just wanted to point out one chart of Emerging Markets that really stands out. Remember this Index is broken down as follows: China 32.40%, South Korea 11.84%, Taiwan 11.71%, India 8.13%, Brazil 6.78%, South Africa 4.25% & Russia 3.84%.
It’s basically 72% Asia and 10% Latin America.
Here’s what it looks like: [Read more…]
I like to keep an open mind. When the data suggests getting more aggressive towards stocks, that’s what we’re going to do. When the data points a more defensive approach, then that’s what we’ll do too.
We’ve had a heck of a run in stocks since the summer, and now I think it’s time for a break, at least at the index level. Remember, regardless of overall market conditions there will still always be some stocks going up and some going down. In fact, I think Utilities see some outperformance here and I listed which stocks we want to own. So far they’re working.
Anyway, so why the new defensive position? Well, the things we said needed to happen for us to pull back are starting to happen. It’s really as simple as that.
Let’s get into it: [Read more…]
From the desk of Tom Bruni @BruniCharting
Thank you to everyone who responded to this week’s mystery chart.
No mixed opinions this week, almost everyone saw the pullback into support as a successful breakout retest and was a buyer.
With that as our backdrop, let’s take a look at this week’s chart. [Read more…]
In this Episode of Allstarcharts Weekly, Steve and I talk about the newest Sector in America: Communications. Back in 2018, the Index makers took out some of our favorite Technology stocks and put them along with some telecom into this new Index called Communications. With Google and Facebook now representing 40% of this $XLC index, the fact that we’re just now breaking out to all-time highs says a lot about the space. [Read more…]
This long weekend we had more time to take a step back and think about the things that are currently going on in the market. A big theme that stuck with us was the strength in stocks in the Utilities sector. The question was/is whether this strength in higher dividend paying stocks is evidence that rates are about to fall? Or is there such an overwhelming amount of strength in the stock market, that Utilities are just included in the rally?
Both are acceptable answers and theories, I’d argue. You can find more on that conversation here.
But sometimes I think we just need to pay attention to what’s right in front of us, which in this case is Utilities stocks going higher. So why don’t we just buy utility stocks and not worry about the bond market for a hot minute? The most bullish thing a stock can do is go up. And that’s exactly what’s happening here.
The advantage in this case, I believe, is two-fold. If this indeed is a sign that rates are about to collapse, that would be good for Utility stocks. If this is just an overwhelming amount of buying pressure for stocks in general, that would be good for Utility stocks. If the stock market goes into a correction, lower beta & higher yielding stocks would hold up better on a relative basis than other stocks and sectors. Again, that would be good for Utility stocks. Do you see the common theme here?
This is what the Utilities Sector looks like right now: Just breaking out and on its way to 73 for $XLU: