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?
Every weekend we publish performance tables for a variety of different asset classes and categories along with commentary on each.
This week's main theme is that the strong continue to get stronger and vice versa, which we'll highlight in our Industry and Sector ETF tables, below.
Notice how the top three performers this week also happen to be the only Industry ETFs that are positive over the trailing 3-month period?
Gold Miners (GDX), Biotech (IBB), and Internet (FDN) posting positive 3-month returns may not sound like much but is actually quite impressive as it means these areas have already taken out their highs from just before the broader market peaked and collapsed in February.
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.
This is our monthly conference call for All Star Charts India Premium Members where we discuss ongoing themes throughout the Indian Stock Market. We employ a top-down approach and consider the global behavior of the four primary asset classes: Fixed Income, Currencies, Commodities, Equities, before moving into Indian stocks.
From a stock market perspective, we begin by analyzing all of the Nifty Major and Sector/Thematic Indexes, as well as some of our own custom indexes that help us understand how the average Nifty 500 stock is performing. After identifying the clearest trends at the index level, we outline which stocks are best positioned to take advantage of those trends.
By focusing on the core tenets of momentum, relative strength, and market trend, we put the probabilities of success increase on our side. We'll do our best to lay out our weight of the evidence conclusions and walk you through the steps of how we got there!
Is the Helsinki 25 Index not on your radar? Well it probably should be. It's hard to find a better gauge of risk appetite and risk aversion anywhere out there in the world.
Take a look at a chart of this rarely discussed index over the past half decade. Finland is where we want to be looking. In this case we're comparing it to the Allstarcharts Global Top 10 Index where we are equally-weighting the 10 largest markets around the world. See any similarities?
It's been a month since the first Chart Summit India on April 14, 2020. I've been watching the videos and learning a lot, and encouraging everyone to do so.
We had 20 brilliant Technical Analysts get together online to raise funds to help fight COVID-19. Thousands of people logged in live, and thousands more came to watch the videos later. I have to say that the Technical Analyst community online has some of the nicest people on the internet. They shared valuable knowledge for FREE. This is stuff that's made them money, and has taken them years to learn.
To start the day we had Peter L Brandt, a legendary commodity trader. Peter lives in Arizona, and trades global markets. He's written books, runs Factor LLC, and has traded on classical chart patters in 6 decades. When he talks, I listen.
In March, the up move and subsequent retracement in Bonds was breathtaking and had the world's attention.
In April, Bonds spent most of the month "normalizing," at a newer, higher level.
Here in May, we're starting to see signs that another move to the upside is materializing. Here's a quote from JC in a recent email to All Star Chart subscribers:
If you're looking for an uptrend, it's in the bond market, NOT the stock market.
...the technical setup in Treasuries looks much better than it does for Stocks right now, over both long and short-term timeframes. TLT is trading just a few percent off all-time highs as price just broke above a confluence of resistance.
And here's the chart of relative strength between $TLT and $SPY that adds further evidence of a resumption of trend for TLT:
This week's Mystery Chart was a simple yet pivotal one... it was a ratio chart of Stocks vs Treasury Bonds.
With stocks struggling at resistance this week and Treasuries meandering beneath all-time highs, both appear to be at key inflection points.
Making things even more interesting is that the S&P 500 (SPY) relative to 20+ Year Treasury Bonds (TLT) ratio is also at a key level of interest. It is make-or-break time for these two asset classes so let's dive in and see what's going on.
