Cotton has been in a horrific bear market for 5 years. When you talk about some of the worst places to be on planet earth over the past half-decade, Cotton has to be near the top of the list. After peaking near 220 in early 2011, the price of Cotton has collapsed recently hitting a low under 55. [Read more…]
The Outperformance From Turkey Is Here To Stay
From the desk of Thomas Bruni @BruniCharting
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Although Turkey has already rallied 25% from the January 20th lows, the weight of evidence suggests this may be the start of a much larger move to the upside on an absolute and relative basis.
Structurally Turkey has been in a downtrend since a failed breakout near its all-time highs of 77.50 in early 2013. In August of 2015 prices broke below long-term support at 40 and have since been building a multi-month base below that level. Last week prices were able to break and close above it, while also closing above the downtrend line from the 2015 highs. [Read more…]
[Premium] The S&P500 Ripped Higher Over The Past Month – Now What?
We’ve had quite a rally over the past month in the U.S. Stock Market. This is exactly the type of behavior that we should come to expect after a failed breakdown and bullish momentum divergence, like we saw occur in early February. Let’s remember that the U.S. and other developed markets, like Europe for example, are the laggards here. We turned bullish Global Equities in late January, particularly Emerging Markets, and it wasn’t until a retest of the January lows, that we started to see the shift in the U.S. and other developed economies early last month.
We only wanted to be long the S&P500 if we were above the August and September lows. The bullish momentum divergence on last month’s sell-off helped spark this mean reversion rally. [Read more…]
5 Things Every Investor Should Know About Dow Theory
Dow Theory is something that gets thrown around a lot, usually irresponsibly. What I mean is, that there is a lot more to Dow Theory that what you normally hear about on the TV or read about on the Internets. Usually, conversations about Dow Theory revolve around the Dow Jones Industrial Average and Dow Jones Transportation Average either confirming or not confirming each other’s trends. This is indeed part of Dow Theory, but not even in my top 5 most important Dow Theory Tenets. There are other aspects of Dow Theory that we need to pay attention to even more.
Here are my 5 most important Dow Theory Tenets: [Read more…]
How I Use Fibonacci Analysis To Make Money In The Market
Fibonacci Analysis is one of the most valuable and easy to use tools that we have as market participants. I’ve studied supply and demand behavior for over a decade, and I find myself using Fibonacci tools every single day. These tools can be applied to all timeframes, not just short-term but longer-term. In fact, contrary to popular belief, technical analysis is more useful and much more reliable the longer your time horizon. Fibonacci is no different. [Read more…]
The S&P500 Runs Into Overhead Supply, Perfectly Normal
This doesn’t have to be complicated guys. Supply and Demand dynamics do not change. I keep hearing how this market is “algo driven” or whatever, but those algos are built by humans. Supply and demand is based on fear and greed in humans, whether discretionary or systematic. I think the debate about algos is a waste of time for all of us. Let the noisemakers, who aren’t trying to make money in the market, worry about that stuff. We’re here to focus on supply and demand. Period.
The S&P500 has struggled over the past week to continue this monster rally from last month’s lows. It should not be a surprise to anyone that we have struggled. Why? Because prices just ran into a ton of overhead supply. This correction is normal, and should be expected. Blame the algos if you want to sound smart in front of ignorant people at a cocktail party, but where I come from, we call this “normal”: [Read more…]
Buy Canada And Short America!
What do you guys think? Buy Canada and short America? Some of you might like the sound of that, others might hate it. Personally I don’t care either way. I treat Canada and the U.S. the same way as I would treat Indonesia, China, Peru, Soybeans, Cocoa, Japanese 10-year yields or Aussie Dollars. It’s just letters and math to me, so I don’t care if Apple doubles in price or goes to zero. The implications of market moves are nothing I can control or worry about. I’m just here to try and profit form the changes in price.
Today I want to talk about why I still think we need to be shorting America and buying Canada instead. This is one I’ve been pointing to since late January, but since then price has just confirmed everything that we were originally seeing.
Here is a 4-year chart of Canada’s TSX Composite Index vs America’s S&P500 Index. You can see this ratio trading lower within a nice clean downtrend channel for several years. More recently in the 4th quarter last year, price fell below the lower of the two parallel trendlines, only to quickly recover in late January. This also confirmed a bullish momentum divergence, as you can see plotted below:
This has been trending higher over the past 6 weeks and I still believe that the failed breakdown earlier this year will be the catalyst to continue to take this higher towards the upper of these two parallel trendlines. It looks like we’re heading back above 7 where I would take tactical profits and reevaluate.
Looking bigger picture, on the other hand, we could be at the beginning of a monster breakout. Here is a longer-term chart going back 20 years. This could be a logical area for this ratio to find support, as it did in 2000 and 2001. Also, we can see that momentum is also diverging positively. Over the past year, this ratio has made 2 lower lows in price, but momentum has put in a higher low on each one of those occasions:
If we can take out the upper of these two converging trendlines over the past 6-7 years, I would expect a big move higher, towards at least 8:1. I would continue to buy Canada and short America with equal nominal amounts. As long as we’re above the lower of these two converging trendlines, I want in!
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Last night, Wednesday 3/9/16, was our Monthly Members Only Conference Call. If you’ve been considering a 30-Day Risk-Free Trial, now is the time. Join today to access the video recording of last night’s call.
Click here to start your 30-Day Risk-Free Trial Today!
Tags: $EWC $TSX $SPX $SPY
[Premium] Monthly Conference Call Video Recording March 2016
Here is the video recording of the February 2016 Monthly Conference Call for Members Only
In the call we discuss:
- How much more upside is left in this global stock market rally?
- Should we expect the U.S. to continue to underperform vs. Emerging Markets?
- How Much Higher Can Crude Oil Go From Here?
- The longer-term dynamics in Gold Miners have changed. How do we profit?
- Apple has bottomed – How high can it go?
- Why We Are Finally Getting That sector rotation into Biotechnology [Read more…]
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