From the desk of Tom Bruni @BruniCharting

Tuesday I posted a mystery chart and asked you all to let me know what you would do. Buy, sell, or do nothing. Most of you said you'd be short or doing nothing until the range resolves lower, while only one or two of you said you'd be long with a tight stop or were waiting for an upside break.

Given how closely this chart resembles the S&P 500 or other major US Indexes, I wasn't surprised by those responses. It still feels like many people have a short bias, so continued churn at current levels or a slow grind higher could leave a lot of people left behind.

Anyway, here's the actual chart and why I feel it's relevant.

Tuesday was only one day but it felt like it may have offered us a clue. The major indices — S&P 500, NASDAQ, Dow, Russell 2000 — all experienced notable pullbacks. Perhaps the first notable pullbacks we’ve seen in at least two weeks.

Now does this mean we picked the top and we’re about to run back down towards the bottom? Of course not. What this likely signals is that we are about to set into a little choppy-churn range for the next month or two.

There are many ways to gauge the strength or weakness of the U.S. Stock Market. For us, there isn't a single "best way" to do it. The advantage we have is that we just analyze all of them. There are over 50 charts in my U.S. Stock Market Indexes workbook alone.

But today I want to focus on an interesting chart that I don't think gets the credit it deserves: The Dow Jones Composite Index. I really like how it represents all of the stocks in the 3 major Dow Jones Indexes: Industrials, Transportation and Utilities. If you want a broad measure of the most important stocks in America, I think this is it.

We’ve had quite a bounce in US equities since the beginning of the year. And the longer this bounce holds, the more appealing the long side gets. However, it still doesn’t alleviate the very real risk that we might be in what could best be described as a classic bear market bounce. And if that is true, the downside from here on any newly initiated long positions could be severe.

From the desk of Tom Bruni @BruniCharting

Last week was our first Mystery Chart and Reveal Post of 2019.

This week we're doing that same exercise with a new chart, x and y-axes and and all labels eliminated to minimize bias. As a reminder, this chart can be any security in any asset class on any timeframe on an absolute or relative basis. It can even be inverted or a custom index.

For those thinking "I know what that is!", I'll save you the time and say you're wrong. Instead, tell me what you would do with it right here.

Buy, Sell, or Do Nothing?

Last week was our first Mystery Chart and Reveal Post of 2019.

This week we're doing that same exercise with a new chart, x and y-axes and and all labels eliminated to minimize bias. As a reminder, this chart can be any security in any asset class on any timeframe on an absolute or relative basis. It can even be inverted or a custom index.

The point here is to not guess what it is, but instead to think about what you would do right now. Buy, Sell, or Do Nothing?

Picking tops and bottoms in the market is really hard. Some people claim they can do it and we'll let them. It's those types of people who help create the arbitrage between the aware and the unaware.

Markets are rarely ever putting in a top or a bottom. Most of the time they're just somewhere in the middle. For years I've told my friend Josh that his best blog post ever was one from 2012 which he titled, "Tops, Bottoms and Middles".

He wrote,

This past week during our first Conference Call of 2019, we discussed the continued lack of direction in the indexes and how the relative strength in Financial Services and Consumer Goods stocks was being offset by the weakness in IT and Energy.

By Friday we finally saw some rotation back into Energy, but there are signs that the major indices won't be off to the races just yet.

Andrew Adams is well known for his morning market commentary to thousands of financial advisors at Raymond James for many years. After working along side legendary strategist Jeff Saut, Andrew has started 2019 wearing his new trader hat. Andrew has wanted to go out on his own and trade full time and he has finally made that move. We here at Allstarcharts want to wish him the best of luck on his new endeavors. During this episode, Andrew tells us about his experiences at Raymond James, working with Jeff Saut, earning both his CFA and CMT designations, and now using this body of knowledge...

From the desk of Tom Bruni @BruniCharting

Tuesday I posted a mystery chart and asked you all to let me know what you would do. Buy, sell, or do nothing. By my unprecise and unscientific count, many of you said you'd do nothing and wait for the range to resolve itself, while others were anticipating a breakout.

So today, I want to reveal the full chart and share why I feel it's relevant.

Tuesday I posted a mystery chart and asked you all to let me know what you would do. Buy, sell, or do nothing. Many said that it looked like a downtrend and that a neutral/bearish approach appeared best. I agreed.

So today, I want to reveal the full chart and share why I feel it's relevant.