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?
Today I have a group of charts that I think will help me explain my thought process here. We're keeping this very simple.
Let's go!
The first thing that stands out is the breakout to new all-time highs for the Dow Jones Industrial Average that has not yet been confirmed by the Dow Jones Transportation Average. This rejection in January and failure to exceed those former highs is worrisome. If this market was as strong as some of the other indicators have/had been pointing to, then we should have seen a breakout by now. Here is the Dow Jones Industrial Avg:
Click on Charts to Zoom in
And here is the Dow Jones Transportation Average getting rejected hard last month:
Two weeks ago we outlined our thesis for near-term weakness in stocks in India and around the globe.
Since then we've outlined additional information that seems to support the thesis that the next few weeks, and potentially months, are to be a choppy environment. (Feb 1, Jan 27,Jan 26, and Jan 25).
After some downside follow-through, many are asking: How low can we go?
In this Episode of Allstarcharts Weekly, Steve and I discuss all the reasons why we're buying bonds right now instead of stocks and commodities. The big point here for me is that it's not just one chart. There is no single holy grail suggesting we buy bonds. This is a weight of the evidence conclusion. It's not one chart, it's hundreds of them all pointing to the exact same thing: Sell stocks and Buy bonds!
This week I saw two different charts floating around that I thought deserved a second look based on how they were presented and what their ultimate conclusion was.
The first has to deal with the underperformance of the Equal-Weighted S&P 500 Index, while the second looks at High Dividend Factor ETFs that have gone off the beaten path.
For a variety of different factors, we've wanted to tactically be selling stocks all week and buying bonds instead, particularly US Treasury and Municipal Bonds. The weight of the evidence has been pointing to a more defensive rotation and out of risk assets. We listen to the market and act accordingly. Anything else would be irresponsible.
To be clear, longer-term uptrends in stocks and indexes globally are still intact, so far. Our goals, however, are to make money this quarter. We'll worry about next year, next year. We'll worry about the 3rd and 4th quarters when we get there this summer. For now, as we finished up January we're now entering what is historically the worst of the "Best 6 Months of the year", which go from November through April. So stocks going down in February would be perfectly in line with seasonal trends.
I can't believe I'm publishing the 100th Episode of this podcast that I started in the summer of 2017. My first guest ever was Ralph Acampora! I mean, how could it not be right? Since then I've had the privilege of interviewing Portfolio Managers, Traders, Analysts, Best Selling Authors and even a World Series of Poker Champion! People all over the world have approached me how much they've learned from listening to the podcasts. It's been an amazing experience for me all around.
"It's a Miracle!" has probably been uttered through tears by stock market bears, news watchers, and particularly Tesla $TSLA bears repeatedly in recent weeks. We're not sorry. If you ignore price action, well... that's on you, friendo.
That said, we've got our own "miracle" play that is setting up nicely...
This post is a quick update on a name in the Consumer Goods' space that we've been watching for a breakout, as well as two other names worth putting on your radar.
