In this Episode of Allstarcharts Weekly, Steve and I talk the relative performance of stocks. When assets are in strong uptrends, they not only perform on an absolute basis, but they tend to outperform their alternatives. With new highs in the S&P500 last month, we've seen nothing but lower highs relative to both Gold and US Treasury Bonds. In fact, on a relative basis, the S&P500 is actually down to its late December 2018 lows. Will they hold or confirm a massive distributive top? I think the resolution will tell us a lot about the strength of the current stock market.

When I go through my charts, I see all kinds of different trends, patterns and consolidations around the world. It really depends on what I'm looking at. However, one area that has been a consistent outperformer is in Medical Device stocks. The way I see it, these are just Tech stocks stuck in the bodies of Healthcare names. So our theme of "bullish tech" makes sense, even though on paper they're Healthcare stocks. 

Here is a chart of the Medical Device & Equipment Index $IHI relative to the S&P500. This one goes from the lower left to the upper right. We call those Uptrends:

When in doubt, seek safety in the leaders.

With markets jittery all over the place, the one area investors still seem to be pretty confident in is the Home Builders. And why not? In a declining interest rates environment, home buyers can finance purchases at historically low interest rates -- why wouldn't they be buying and building new homes?

Of course, even in the strongest names, this is no time to be a hero. Prudent risk management is still job #1 and we are not looking to be too aggressive here. Therefore, we've got a bullish play on tap, but we're approaching it in such a way so as to put ourselves in position to participate in upside as cheaply as possible.

The major indices in India are stuck in "no man's land" right now, making it a tough trading environment for many.

In this post, we're going to take a quick look at what that means and how we're approaching it.

Back in April, we attempted to get long Texas Instruments $TXN, but the stock gapped higher at the open on our entry day and it didn't come back for a month. So we missed it. And that was a bummer. But sometimes, life (and markets) gives us a second chance. And here we are.

Let's not waste any more time. We're getting to work!

From the desk of Tom Bruni @BruniCharting

In early July we were looking at some divergences that were signaling a potential short-term bottom in US Interest Rates.

That thesis was quickly proven wrong as global yields pulled the US down with them, and last week in our Conference Call we discussed our current outlook for Bonds and their many intermarket relationships.

Earlier this week JC discussed the fact that Bonds are at an interesting level relative to the S&P 500 as well.

Yesterday I discussed some of the pitfalls to avoid when using Bond ETFs as a proxy for the underlying assets.

Needless to say, we've been talking a lot about Bonds.

In this post, I'm going to take a simplified look at price action and momentum of the 2, 5, 10, and 30-Year Treasuries to assess the reward/risk and if there's a short-term trading opportunity at current levels.

From the desk of Tom Bruni @BruniCharting

Tuesday's Mystery Chart is one of my favorite charts right now, so thank you all for your feedback and participation.

Almost every one of you said you were selling the stock in question as it put in a failed breakout, while a handful of you were doing nothing and buying the subsequent breakout with me.

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

From the desk of Tom Bruni @BruniCharting

This week I've seen a chart of High Yield relative to Investment Grade Bonds floating around with various conclusions, but I wanted to use this to highlight some things to consider when using Bond ETFs as a proxy for what's happening in the market it's meant to track.

While many stocks and indices are attempting to repair themselves from recent August volatility, the Energy sector continues to be mired in a year-long downtrend. And considering many of our current positions are leaning long, it is always good to have some counterbalancing positions in the portfolio. We've got a conservatively bearish play on deck to help accomplish this mission.

Assets in the strongest uptrends not only do well on an absolute basis, they tend to outperform relative to their alternatives as well. In the case of the S&P500, with new all-time highs last month, we've just seen lower highs relative to both Gold and US Treasury Bonds. This is NOT evidence of a strong uptrend.

The question today seems clear to me: Is the underperformance of stocks relative to other assets "The Divergence" that we'll point to in the future as the heads up that something was changing? Or will we get relative rotation back into equities and this was just a temporary blip while stocks consolidated their massive 2016-2017 gains?

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?