The Nifty Public Sector Bank and Media sectors of the market have been laggards for a while, but we're now beginning to see signs that rotation into these areas is ahead.

From the desk of Tom Bruni @BruniCharting

Tuesday's Mystery Chart had a lot of people talking and guessing (incorrectly, as usual), so thank you all for your feedback and participation.

Opinions were mixed on how to approach it, but I'd say the majority are looking to position themselves for further upside.

With that as our backdrop, let's get into it.

You can now add the Financial Sector Index to your list of new 52-week highs. This is further evidence of expansion in upside participation, not contraction. Breadth improvements like this keep adding up, there's no denying that. It's hard to make the argument that Financials are underperforming when they're hitting new 10-month highs relative to the S&P500, which is the exact opposite of underperforming.

Rotation rotation rotation. It's the lifeblood of a bull market.

Remember when the bears were arguing that it was defensive rotation and the market was being driven by Utilities and Staples? Well both of those sectors are actually down YTD relative to the S&P500 and still making new relative lows.

So yes, positive rotation is what we're seeing.

Today we're looking at Financials pushing up against their historic 2007 highs for the 3rd time:

I recently received an email from a subscriber asking about best practices in exiting options positions:

How do you automate managing risk on options if you want to define it through the base stock price? E.g. you have calls on MSFT that you bought based on MSFT holding support at $100. Do you auto-sell (put a stop loss) on the option based on the MSFT price, not the option price itself?

Good question. And the answer is no. 

From the desk of Tom Bruni @BruniCharting

In today's Chart of The Week we look at the ratio of Chinese Internet stocks relative to US stocks and why it's potentially pointing to outperformance in the months and quarters ahead.

This premium post will outline the stocks we like to take advantage of that thesis. If you've not read that post, I'd recommend you do so you have the proper context around these ideas.

Stocks are breaking out to new highs, however, not all areas of the market are participating to the same extent.

Today we're looking at a chart that suggests one market laggard is potentially undergoing a trend change and may outperform in the weeks and months ahead.

In this Episode of Allstarcharts Weekly, Steve and I talk about all of the new highs we're seeing on both Weekly and Monthly charts. We've been pointing to the improvements in market breadth in recent months and how we've been getting an expansion in positive participation, not a contraction. This week we started to finally see this work its way into the weekly and monthly charts, but that doesn't change anything we didn't already know. We continue with the breadth discussion by pointing out that the world doesn't start and end with the 52-week highs list. We're seeing breadth improvements in the 21-day high and 13-week high lists and I'm in the camp that we'll ultimately see that reflected on the 52-week high list as well. It's a process, remember:

This week I sat down with Pearlman to talk about the fact that stocks are making new highs but the amount of bulls betting on higher prices is near now lows. It was a really interesting conversation so make sure to check it out.

At the end of our chat Phil asked me about some comments I made recently regarding the CCI Commodities Index.

Here is the chart he was referring to where Commodities are doing something they haven't done in 8 years. I think it's worth pointing out for sure:

From the desk of Tom Bruni @BruniCharting

New Mystery Chart!

For those new to the exercise, we take a chart of interest and remove the x/y-axes and any other labels that would help identify it. The chart can be any security in any asset class on any timeframe on an absolute or relative basis. Maybe it's a custom index or inverted, who knows!

We do all this to put aside the biases we have associated with this specific security/the market and come to a conclusion based solely on price.

You can guess what it is if you must, but the real value comes from sharing what you would do right now. Buy, Sell, or Do Nothing?

This is the video recording of the November 2019 Conference Call for Members of All Star Options

Stocks are going up. Interest Rates are not.

This we know.

If you haven't seen our thoughts on stocks lately, I encourage you to catch up here: November - October - September. Today, however, we're more focused on the bond market and what we can learn from it.

First of all, here is the US 10-year Yield. If we're below 2.07 then there is no reason to expect a severe bond sell-off. I guess it depends on what you consider severe, but bigger picture I don't think there is any change in trend until we're above that. And it's not happening tomorrow. 

In this episode of the Money Game Podcast Phil and I talk about the stock market making all-time highs while sentiment points to very few bulls. This is an interesting dynamic where the behavior of the market is pointing to one thing and the behavior and emotions of society are saying something different. I've been in the camp that this negative sentiment unwind is precisely the catalyst to take stocks much higher, not just in the U.S. but around the world. It's very rare to have stocks this strong, yet so few people betting on higher stock prices. It's pretty awesome. We also talk about the deterioration, or at least an end to the expansion we're seeing, in the upside participation in stocks. We're seeing MORE stocks, sectors and global indexes participating to the upside, not fewer. Until that stops, we want to keep looking for stocks to buy.