In my last post I outlined the evidence from India and around the globe that suggests equities as an asset class are headed higher. I pointed out the failed head and shoulders topping patterns in the Nifty 50 and other indices that should fuel the move higher. With that being said, I wanted to outline the Nifty 50 stocks where I believe the risk is defined best and the reward/risk is still favorable.

When I go through all of the crypto currencies, the healthiest one and the only one already pressing up against key resistance is Ethereum. You guys know I look for relative strength and positive momentum. Ethereum is showing characteristics of both right now.

Today I want to take a look at what we're seeing in Ether, as the great Nasir Jones would refer to it. He's one of our generations greatest poets and I think what we're seeing in the Ether right now is pure poetry.

When I go through charts of the most popular crypto currencies, it's hard to ignore the fact that we're seeing prices breaking out above downtrend lines from their respective highs. Go one by one, we're seeing it all over.

So what does that mean? Should we be buying all the crypto currencies right now?

From the desk of Tom Bruni

Since the market's volatility picked up in late January, one key piece of the bear thesis has been weakness in Technology, yet we've not seen a crack and flush lower. I don't know about you, but I was promised a "Tech Wreck" and will not leave until we get one or Mr. Market provides me a refund.

Okay I'm being facetious, but in this post I want to outline what I'm watching and explore what the implications are if the potential bearish patterns in this sector don't pan out.

Just because a stock or an index is choppy and moving sideways doesn’t mean we can’t participate in some profits. There’s opportunity in every situation, especially with options.

I'm going to disappoint the options eggheads with my opinions here, because I'm going on gut feel.

I haven't done any exhaustive research. I haven't done any volatility skew analysis or 3D modeling. I haven't reviewed seasonality patterns, or dug deep into open interest imbalances.

No, I haven't done any of that.

Simply trusting my gut, it feels to me fear of stock market risk is being overplayed and everyone who is scared of headlines, trouble in the White House, geopolitics, etc (which seems is nearly everyone) has already fully hedged their risk or has put on speculative short positions and are thus natural buyers into any dips to profitably cover their positions -- which in effect helps to put a floor under equities.

Think about it.

From the desk of Tom Bruni

Many have fixated their attention on the "triangle pattern" that's formed the NYSE Composite Index and other major US indices.  This pattern is a visual representation of the indecision between buyers and sellers in the market, and its resolution typically leads to a significant move in the direction of its breakout.  In times like this where the index itself has little directional conviction, a study of the components may offer some insight into which way the market resolves.

It's impossible for me to ignore. As someone who pays such close attention to Momentum, the fact that there are so few stocks showing bearish momentum characteristics is absurd. The overwhelming strength being shown here from stocks is spectacularly bullish in my opinion. Combine that with the fact that everyone thinks the world is coming to end, and boom, you've got a trade!

Until proven otherwise, it is irresponsible to be positioning for a bear market right now. The talking heads and twitterverse all seem to be rooting for -- cheering for, even -- the S&P 500 to break it's 200-day moving average and crash further from there.

It's ok to root for any scenario you'd like, but it's simply unprofitable to act on opinions (yours or others) until there is a basis of fact to back you up. And the only facts we focus on here are those presented and derived by price and volume.

The weight of the evidence still points to higher prices in equities over the intermediate term, and as such we're hunting for bullish trades. Today's hunt yielded a developing opportunity in Caterpillar $CAT.

It's no secret that JC and I are extremely bullish on stocks. Just like you'd like to see in a bullish environment, we're being led higher by tech stocks. And there's no better barometer of health in the tech sector than seeing old bellweather Microsoft still hanging around new all-time highs and cruising comfortably above it's 200 day moving average.

From the Desk of Tom Bruni

Three weeks ago I had the pleasure of attending the CMT Association’s 45th Annual Symposium in the Financial District of New York City. In prior years I’ve lived vicariously through previous attendees’ tweets and blog posts, so this year I was equally nervous and excited when I decided to attend in person for the first time.

This year’s theme was “Navigating the Gap: Forces That Influence Price Dynamics”, which suggests that there’s a “gap” between the market price of securities and their intrinsic value and that technical analysis can help in navigating that gap by providing a way to analyze market behavior and the law of supply and demand. As market practitioners we know that markets are not efficient, which is why we all do the work that we do.

After a strong 2017 for equities as an asset class, 2018 has started off with a bit of a change of character. Volatility is back and frustrating stock market participants, with the median of 43 global stock market indices correcting 11% peak to trough, however, as of today 31 of 43 (72%) stock markets are in a confirmed uptrend as indicated by a rising 200-day moving average. The median equity market is off 5.77% from its 52-week high and has not hit a 52-week high in 66 days, or about 3 months/1 quarter.

I don't know about you, but at face value these stats do not seem to support the prevailing sentiment that stocks are headed lower, and much lower at that. There are some valid concerns, yes, but after looking at charts from all over the world, the weight of the evidence continues to suggest higher stock prices globally. Still, many question what will be the driving force behind higher prices. Well, in regards to India I see several failed bearish patterns that could fuel new highs in the major indices.