There is a lot of noise surrounding the period between Christmas and the start of the new year. Santa Claus rally this, end of 2016 predictions that, what worked this year, what didn't..... The truth is, most of that doesn't matter and is just a lot of air-time filling, click baiting noise. Sure, if Santa Claus doesn't show up and the U.S. Stock Market doesn't rally during the last 5 trading days of the year and first 2 of January, bad things tend to happen. Fine. But end of year predictions are always wrong and they're just a sell side marketing gimmick that the financial media eats up and loves to promote. It's just noise. As far as what worked this year and what didn't - it's too late now anyway, so who cares. We want to look forward don't we? Aren't we here to make money?
What we really want to focus on during this period of the year is
As we close out 2015, one of the biggest stories of the year has to be the crash in Energy prices. The CRB Commodities Index is heavily weighted in Energy and, as an Index, has fallen over 20% this year now down almost 65% from its peak in 2008. Here is how I think we can profit from this in 2016:
This week I sat down with Frances Horodelski over at Business News Network to discuss the disastrous implications of a breakdown in the Dow Jones Industrial Average below last week's lows. Apple continues to be a 'sell on any strength' stock and an inversion of the yield curve is likely to come next year.
This week I had the opportunity to join Joe Weisenthal and Alix Steel on Bloomberg's What’d You Miss? On this appearance I wanted to follow up on our Apple discussion over the Summer when I warned that a break of key support would lead to a much bigger problem. This is precisely what occurred in August and since then this stock has continued to be a sell on any strength. Looking bigger picture, Bonds keep outperforming stocks as they have for the last 2 years and still think this trade keeps working. We also touch on the yield curve where if 10s minus 2s break 1.20, then I think the next stop is an inversion of the yield curve.
Technical Analysis of Stock Trends by Robert D. Edwards and John Magee is widely considered to be the Bible of Technical Analysis. Today I thought it would be a good idea to share with you guys Page 1 of Chapter 1, so you can see exactly what these guys were thinking when they first wrote the book in 1948.
Since October 23rd, the Dow Jones Industrial Average has been a place where we've wanted to stay away. This was the day that it first crossed above what was then, and still is, a flat 200 day simple moving average. When prices are anywhere near a flat 200 day, we want nothing to do with it. For almost 2 months now, this index has been stuck in a tight, yet volatile range, frustrating both the bulls and the bears along the way. But after the dust has settled, prices are exactly where they started on October 23rd. To me, it's the perfect example of why we avoid these sort of situations. Who needs that headache?
The noise surrounding the U.S. Interest Rate Market has been all Fed all the time. For headlines and theory, that's great. For market participants who live in the real world, we like to focus on what the market is actually doing, not what a group of economists may or may not be thinking 8 times a year.
The real story is not what the Federal Reserve is saying. The story is that the yield curve is and has been narrowing. In other words, the spread between long-dated Treasury bond yields and short-term yields has been getting smaller and smaller. Notice how 2-year yields are hitting 5.5-year highs this week, but 30-year yields won't budge as they remain near the same levels from a year ago.
There are plenty of charts that tell this story well, but I think these two
Thank you to everyone who registered for the new All Star Charts membership. I'm super excited to have you guys as part of our team. Remember, we're all in this together trying to navigate through this market day in and day out. It’s a puzzle that is constantly evolving and what we’re here to do is look for major trends around the world and then break those down to find more intermediate-term investing opportunities based on those structural setups. The new All Star Charts was an idea we’ve been working on for a long time, so we couldn't be happier to finally be able to share the ideas and the homework that I already do with all of our new members. Welcome to our club!
For the past 2 months I’ve been very vocal about how there’s been no reason to own the major U.S. Stock Market Averages. If there’s been any trade to be made, it's
It amazes me how we're almost in 2016 and you still hear what I consider to be intelligent and experienced market participants talk about technical analysis as a self fulfilling prophecy. A statement that technical analysis is self-fulfilling is suggesting that there are events in the market that are caused directly or indirectly by the preceding prediction or expectation that it was going to occur by a group of market technicians. I can understand when a new investor who doesn’t know any better uses the phrase because maybe he/she heard it once before and it sounds smart. That’s just human nature and you can’t fault them for it. But you guys who by now should know better? Come on.
This is a topic that I've brought up before but I think is worth mentioning it again as it has come up in conversation a few times recently. The problem is that this is such a ridiculous claim that I feel stupid even acknowledging it. But I'll address this again anyway.
Last week I invited everyone to jump on a conference call to discuss what I think are the best 10 charts in the world. I don't want you to think that these are just the 10 best trades, or 10 strongest stocks, or anything like that. It's bigger than that. This list is what I consider to be the 10 most important trends, or changes in trends heading into 2016. If you watch the video, I included 2-3 charts or data points as a supplement to each of the top 10 charts. See:Video Here.
For supplemental charts and further explanation of each of the top 10, please see the full video:
