Every week we publish performance tables for a variety of different asset classes and categories along with commentary on each.
Last week was a big one for the bears as most risk-assets sold off aggressively to end the week after a strong start.
Many major Indexes in both International and Domestic Equity Markets printed bearish island reversal patterns, most of which occurred at logical levels of overhead supply. Read our post about it here.
We also just wrote about how the market's secular leaders are holding up best since market internals peaked about two weeks ago. We're going to use our US Index and Sector tables below to highlight the noteworthy relative strength from these areas amid the recent market weakness.
Let's take it from the top and begin with our US Index ETF table.
If you believe the longer-term uptrend is still in tact, then you have to love opportunities to buy on the dip during market pullbacks.
And the best place to look for these dips is in the strongest sectors that have been leading us higher since the depths of March. The software sector is in my sights today.
A lot of our focus in the Commodity space has been around Gold/Silver and Base Metals, and rightfully so as those have been trending well, but there are now several interesting setups in the Agriculture space.
In this post, we're exploring some emerging opportunities amongst the less widely-followed Commodities.
First, let's take a look at Rapeseed Mustard, which is a great example of how quickly these assets can move once they get going. Not only does this highlight the profit potential, but also the importance of risk management and respecting stops when things head in the wrong direction.
When stocks as an asset class are in a strong uptrend, or "bull market" as some like to call it, they don't just perform well on an absolute basis, but they also tend to outperform their alternatives. Two perfectly good alternatives to owning stocks are Bonds and Precious Metals.
As you can see in this chart, in early March the S&P500 broke key support relative to both US Treasury Bonds and Gold. All of that former support since 2018 "should" turn into resistance, based on our polarity principles.
Since global markets are highly correlated, it's important to understand what's happening in Equities around the world before we get into what's happening in India's major indexes and individual stocks.
This week's talk of the town in the Technical Analysis community is the "Island Reversal", and rightfully so, as some of the world's strongest indexes are sporting this pattern.
Let's take a look and get into what it could mean for the days/weeks ahead.
Two weeks ago I wrote about the downside resolutions in Treasuries and Yen and the questions we would be asking in the days following. Given their rallies in the last week, we continue to ask those questions and observe what messages these "safe haven" assets are sending about the market.
This week's talk of the town is the "Island Reversal", and rightfully so, as some of the world's strongest indexes are sporting this pattern.
Let's take a look and get into what it could mean for the days/weeks ahead.
In early May we outlined the "Five Bull Market Barometers" we're watching to identify the beginning of a new bull market in stocks.
If you haven't read our initial post linked above, we'd encourage you to check it out so you understand what the rationale behind these five indicators is.
It's been a close your eyes and buy anything market, particularly the past few weeks as even the most hard-hit areas experienced monster rallies. That appears to be changing this week with the biggest 1-day down move in the S&P since mid-March as well as the largest single-day spike in volatility since February 2018.
Last week we highlighted the healthy rotation into cyclicals. We pointed out that the secular laggards and areas that had suffered serious structural damage were now outperforming, and by quite a wide margin.
We used this scatter plot of our Dow Jones Industry universe to illustrate this price action.
The first thing we want to do when analyzing any asset, crypto or otherwise, is identify the direction of the primary trend. In the case of Bitcoin, the trend for the lifetime of this asset is clearly: Up.
Look at this pattern of Uptrend, Consolidation, Breakout, Uptrend, Consolidation, Breakout, Uptrend, Consolidation, Breakout, Uptrend, Consolidation.....
