To quote our Head Technical Analyst at All Star Charts, Steve Strazza: "Bullish setups are hard to come by these days."
Yeah.
But, for those willing to venture into the choppy waters, recent market action has provided us with some nearby risk management levels that give us the opportunity to act quickly if we're wrong, limiting our losses while giving us multiples of potential profit (as measured against the risk).
And today's idea comes from the only sector to show YTD gains this year.
Dividend Aristocrats are easily some of the most desirable investments on Wall Street. These are the names that have increased dividends for at least 25 years, providing steadily increasing income to long-term-minded shareholders.
As you can imagine, the companies making up this prestigious list are some of the most recognizable brands in the world. Coca-Cola, Walmart, and Johnson & Johnson are just a few of the household names making the cut.
Here at All Star Charts, we like to stay ahead of the curve. That's why we're turning our attention to the future aristocrats. In an effort to seek out the next generation of the cream-of-the-crop dividend plays, we're curating a list of stocks that have raised their payouts every year for five to nine years.
We call them the Young Aristocrats, and the idea is that these are "stocks that pay you to make money." Imagine if years of consistent dividend growth and high momentum and relative strength had a baby, leaving you with the best of the emerging dividend giants that are outperforming the averages.
From the desk of Steven Strazza @Sstrazza and Ian Culley @IanCulley
King Dollar is reasserting its reign at the expense of major global currencies and risk assets.
What started as a potential failed breakout last month is proving no more than a hard retest, as the US Dollar Index $DXY broke to fresh 20-year highs yesterday.
It remains a risk off environment. With the indexes breaking down (S&P 500 at lowest level of the year and Value Line Geometric Index back to where it was in the Summer of 2017) and selling pressure intensifying, we are trimming our equity exposure. This helps increase our liquidity (which tends to be a scarce and valuable asset in periods of turmoil) and leaves us well positioned to lean into opportunity when our bull market re-birth checklist improves.
While there were some hints of a “throwing the baby out with the bathwater” type of environment yesterday, the selling for now seems more consistent with evidence of weakness that could continue than exhaustion that could produce a turn. The NYSE TRIN (a measure of selling and buying pressure) spiked to a new cycle high near 3.5. Outside of periods of stress, this is about as high as it gets. In periods of turmoil, it can move much higher (it peaked above 5 in 2015, above 7 in 2011 and approached 10 in 2008). NYSE volume was tilted 60-to-1 to the downside and new lows on NYSE+NASDAQ surged higher (though remained shy of their May peak).
There's no hiding the fact that we've had little to discuss in the way of tactical trading opportunities.
To avoid repeating ourselves, we're continuing our patient approach. You can read yesterday's note or last week's for more detail.
Speaking anecdotally, crypto traders specifically seem incredibly susceptible to a subconscious bias that they always have to be positioned. Everyone's trying to bottom-tick the market to fuel their ego.
It's a rookie's mistake, and the reality is far from the truth.
Maintaining the ability to sit out is not only a necessity in markets like these, but I'd argue should be the default option for traders.
The old saying is that there's only a handful of periods every year to make money. You're being patient for the rest of the year, waiting for the setup to form.
The market has been finding it excruciatingly difficult to hold don to higher levels. This time we have a sell signal coming from another big name. Let's take a look at this, shall we?
We retired our "Five Bull Market Barometers" in 2020 to make room for a new weekly post that's focused on the three most important charts for the week ahead.
This is that post, so let's jump into this week's edition.
