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?
Consolidations tend to resolve in the direction of the underlying trend. But when they don't, that's the signal!
An oldie but goodie from the past, that I always think about when this comes up, is the US Treasury Bond Fund back in the Fall of 2016. I remember chatting with Liz Claman at the time about it on FOX. The $TLT was consolidating in a classic, textbook continuation pattern above former resistance from the early 2015 highs:
The bet we were making (for many other factors as well at that time) was that this was not a continuation pattern, and instead a massive failed breakout.
Last week, the guys published a bullish piece on Chinese internet stocks. Since then, a bunch of them have already taken off and I don't feel like chasing here. However, one name that wasn't mentioned is setting up for a potential "catch up" trade and the time feels right to jump in.
Looking at Monthly Charts only takes about an hour per month and is one of the most valuable exercises in our process. By focusing on the long-term, we can filter out the noise and identify what's really happening with a stock, index, etc.
In this post, we wanted to share a few charts that stood out to in May.
Today I want to talk about how important it is to know what's inside the index funds you own. In many cases they can be misleading. Something like the Dollar Index, for example, which is basically 60% Euro, is not exactly the best barometer of the "U.S. Dollar". The Consumer Discretionary Index is 23% Amazon. Stocks like Google and Facebook aren't even in the Technology Index! Combined, $GOOG & $FB actually make up around 40% of the Communications Index.
It's important to know what you own, or what you're analyzing for that matter. When you talk about the S&P500, this is basically they greatest momentum strategy of all time. It buys more of the biggest and best performing stocks and kicks out the worst ones, replacing them with better performers. For me, this is the best large-cap momentum strategy ever created.
As June gets under way, it’s time to review positions with June options that remain open (haven’t already hit profit targets or been stopped out).
Most trades I put on for All Star Options tend to have a minimum duration of 30 days (short premium plays) and often as long as 6-8 months (for long premium plays). As options approach expiration, greeks like theta and gamma start to become my enemy and whipsaw my P/L. Therefore, as options and spreads get into the expiration month, my best practice is to put each position on notice — it’s time to take action.
Over the past few days, we've had traders and investors from all over the world go through our new Charting School. In case you missed it, I partnered up with a group of Emmy-award winning producers to put together what I think is the best course on Technical Analysis ever created!
I can say that with a straight face because these 6 hours of content are filled with lessons that I've had to learn the hard way over the past 2 decades, plus all of the knowledge I've picked up from the best Technical Analysts in the world, either in real life over the years or on my podcast that now has over 100 interviews.
We've had a lot of feedback so far from people taking the course. The one common denominator between all of them is, "It's Practical".
Every weekend we publish performance tables for a variety of different asset classes and categories along with commentary on each.
This was a special week as Friday marked the end of May which means fresh monthly candlestick data. Analyzing these long-term monthly charts every several weeks is a great exercise as it forces us to take a step back and identify the structural trends that are in place.
As such, this week’s theme is the continued outperformance over both the short and long-term from those areas sporting the strongest primary uptrends.
Tech $XLK is by far the best performing sector over the trailing year. It is also the 2nd best over the past month and quarter, behind Communications $XLC and Health Care $XLV, respectively. Not surprisingly, these same sectors are also the next best performers over the trailing year.
Friday was a great day in my life. Not only did we get new Weekly Charts, as we normally do on Fridays, but we also got a fresh batch of Monthly Charts to analyze as well. These are all great developments for a team like ours, so driven by data. It's like a little mini-Christmas of data, for us to dive in to.
"Whenever in doubt, Zoom out", is how I learned it. The beauty of Monthly Charts is that it makes it impossible to ignore the primary trends. And that's what this is all about.
I like taking notes when I'm doing my chart reviews, Monthly's or otherwise. Here are a few things that stood out:
First of all, the Nasdaq Composite went out at new all-time highs, US 10yr Treasury Bond Futures went out at new all-time highs, and Gold & Silver went out at new multi-year highs.
My question here is, Who's NOT making money in this environment?
Also on the new all-time monthly closing high list:
Earlier this month we outlined the "Five Bull Market Barometers" we're watching to identify the beginning of a new bull market in stocks.
In this post, we'll update those charts without going into as much detail as to why they're important. So if you haven't read our initial post linked above, we'd encourage you to check it out.
With that said, let's jump in and see how these charts have developed since.
Friday afternoons are my favorite part of the week, but not just because the weekend is starting. Instead, it's because we get fresh weekly candles to analyze the long-term trends of the securities and assets in our universe.
And this week, we've got a big development in Silver. Prices went out at their highest weekly closing price since September 2013.
Let's take a look at what it means and how we're trading it.
