Last week we outlined two Commodities that were ready to bounce and they're off to a great start.

Today we want to turn our focus to Base Metals, where one Commodity looks ready to reverse to the upside.

From the desk of Tom Bruni @BruniCharting

Tuesday's Mystery Chart is one of my favorite charts right now, so thank you everyone for your feedback and participation.

I received a lot of answers, but most of you were buyers and the rest were split between doing nothing and selling.

With that as our backdrop, let's get into it.

From the desk of Tom Bruni @BruniCharting

We've been watching some of the Energy ETFs we track most of this year for potential mean-reversion opportunities on the long side.

We recently discussed for our Institutional Clients an opportunity in the Small-Cap Energy ETF (PSCE), which rallied 17.50% from its 2018 lows before reversing back to those levels again.

The main issue in Energy remains that there appears to be an attractive mean reversion opportunity at the ETF level, but when we drill down into individual stocks there aren't many clean setups...making it difficult to identify what the main drivers of this move higher would be.

Let's take a look.

For the purpose of this exercise, we're going to look at Oil Services ETF (OIH) because its risk management level is the cleanest of the Energy subsectors.

From the desk of Tom Bruni @BruniCharting

JC and I are generally on the same page about a lot of things, but this week our brains seem to be very in sync as we're writing about the same topics with a slightly different spin on each subject.

Yesterday JC spoke about how US Equities can do just fine, actually really well, during periods of Small-Cap underperformance.

Today I want to take a more granular look at the Russell 2000 and see what its recent price action has in common with the Euro Stoxx 50.

The All Star Charts team has been drawing attention to financials and banks recently, putting forth the idea that the broader markets likely will not rally without banks participating:

We’re in the camp that Interest Rates in the US and Globally are set to mean-revert over the coming weeks and months, and if we’re right, that should benefit Equities as an asset class and Financials due to the rotation they’ve seen over the past several months.

And since we're believers that the market is going higher from here, logic dictates we should be looking for opportunities in the banks.

ASC published a piece on Regional Banks earlier in the week highlighting a handful of names to keep an eye on for upside should certain levels be pierced. Yesterday, we had our first name pop up and declare it may be ready.

With U.S. Large-cap Indexes breaking out to new all-time highs, many are wondering when, and if, the Small-caps are ever going to catch up. The Dow Jones Industrial Average, S&P500 and Nasdaq100 have all taken out former highs and are currently in uncharted territory. The Mid-caps, Small-caps and Micro-caps, however, are still all well below their 2018 highs.

While we like to pride ourselves in looking at more charts per week than almost anyone on earth, I get a lot of value from regularly speaking to clients and colleagues. Tuesday was one of those days that I found myself on the phone speaking with people around the world. One theme that came up multiple times was the underperformance in Small-cap stocks throughout the late 90s. It's something we've seen before. U.S. Large-cap stocks can do very very well even with small-caps underperforming, like they have since last year.

From the desk of Tom Bruni @BruniCharting

New Mystery Chart!

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?

From the desk of Tom Bruni @BruniCharting

We've been pointing to the improving relative strength of Financials in the face of falling Interest Rates in the US and around the world.

Today I want to focus on what we're seeing in Regional Banks.

Since early July stocks in India have come under more selling pressure, with the Mid-Caps and Small-Cap indices falling roughly 10% and the large-cap Nifty 50 falling about 6%.

This has exacerbated the relative underperformance of India versus other Emerging Markets which it had been outperforming up until late May.

Prices in many of the major indices are now approaching critical levels of support, begging the question will buyers will step in again to defend these levels or is more selling ahead?

Financials are a big focus of ours right now. We can make a strong case that this is the most important sector in America. Traditionally, Industrials are the most positively correlated with the S&P500 and Technology is the largest sector by market cap. But we don't have bull markets without bank stocks. That's the way this works.

From the desk of Tom Bruni @BruniCharting

When going through my chartbooks this weekend one chart stood out to me, highlighting a theme we've been pointing out to our Institutional Clients that's worth mentioning again.

There's an opportunity developing out on the farm -- everyone's favorite farming machinery (and apparel?) company is setting up for a big harvest. While investors should take notice, opportunistic trader hunters like us have spotted a way to get in/out with a quick profitable trade before volatile weather appears on the horizon to spoil all our hard work.