In an environment where volatility has picked up at the index level and there are more mixed signals in the market, we want to be more selective in the longs and shorts we put on.
An important part of tightening up our risk management across the board is knowing what timeframe is relevant to us, both at the portfolio and individual stock level.
Today we want to look at an example in Jubilant Foodworks to highlight this concept.
Last week’s Mystery Chart featured an ominous rounding top, complete with price violating key lows as it aggressively collapsed.
Today, we’re going to turn that frown upside down. It actually wasn’t a rounding top at all.
We inverted the chart, as we often do, in an effort to make some of you out there aware of any bullish or bearish biases you may have.
In other words, if you were buying this chart (which most of you were NOT), you are really a seller. And if you’re a “seller” who only bought the Mystery Chart because you have a bullish bias, you might now be wondering why you would ever bet against such a nice base.
When we flip this chart around, you can now see we’re looking at a massive base on Japan’s Nikkei 225.
In this post, we’ll check in on the Nikkei and see what market breadth is signaling about the internal strength of the Japanese stock market.
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?
We retired our "Five Bull Market Barometers" in mid-July 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.
From the desk of Steve Strazza @Sstrazza and Louis Sykes @Haumicharts
At the beginning of each week, we publish performance tables for a variety of different asset classes and categories along with commentary on each.
Looking at the past helps put the future into context. In this post, we review the relative strength trends at play and preview some of the things we’re watching in order to profit in the weeks and months ahead.
Like we discussed last week, Equity Markets are becoming more of a mixed bag. This week, we'll expand on this theme.
Prices continue to flirt with the risk levels we've outlined for various assets in recent weeks. We still believe the weight of the evidence is in favor of the bulls, but with so many assets at inflection points, we're paying close attention to every new day's data as it comes in.
In a recent report to ASC Institutional subscribers, the team laid out a case for strength in the Homebuilding sector as several components are approaching breakout levels from monster bases. Its relative strength vs. the S&P 500 over the past month is evidence that the year-to-date leadership from this group is likely to continue for now.
Welcome to our "Under The Hood" column for the week ended October 2, 2020.
What we do is analyze the most popular stocks during the week and find opportunities to either join in and ride these momentum names higher, or fade the crowd and bet against them.
We use a variety of sources to generate the list of most popular names. There are so many new data sources available that all we need to do is organize and curate them in a way that shows us exactly what we want: A list of stocks that are seeing an unusual increase in investor interest.
Whether we're measuring increasing interest based on large institutional purchases, unusual options activity, or simply our proprietary lists of trending tickers... there is a lot of overlap.
The bottom line is there are a million ways to skin this cat. Relying on our entire arsenal of data makes us confident that we're producing the best list each week and gives us more optionality in terms of finding the most favorable trade setups for our clients.
