From the desk of Tom Bruni @BruniCharting

Earlier today we uploaded a post outlining the case for some mean reversion in Canadian Equities, as well as the stocks we're buying to take advantage of that thesis. The same pattern that can potentially drive those stocks higher is also present in the IBD 50 ETF FFTY, so in this post we're outlining the IBD 50 stocks with the best reward/risk.

First let's take a look at the ETF itself, which has fallen 35% since October and recently undercut support as momentum diverged. If prices are above 26.75, this failed breakdown and bullish momentum divergence setup remains intact, targeting former support near 32.

Click on chart to enlarge view.

From the desk of Tom Bruni @BruniCharting

In late November we wrote about the best long and short setups in the TSX 60, and our winners offset those trades that were quickly proven incorrect. In today's environment we're seeing potential for mean reversion in several areas of Canada's stock market, so we're going to focus on the best reward/risk setups on the long side.

First let's start with the sectors and indexes to identify what areas of the market we're likely to find individual stock ideas.

At the broader-market level, the Equal-Weight TSX 60 is attempting to confirm a failed breakdown and bullish momentum divergence by closing above 135.05, which would signal potential upside toward 143.25.

Click on chart to enlarge view.

USD/INR is at an important inflection point that should set the tone for this pair in 2019. Here's what we're watching for clues into its next major move.

We're headed back to our friendly neighborhood bank teller at JP Morgan Chase. She seems to like handing us cash. Twice she has been quite generous to us and the post-Christmas bounce in shares of $JPM gives us extra interest in coming back for a third helping.

This is the video recording of the January 2019 Conference Call for Members of All Star Options

Since early October, a big question for us has been, "How low can US Stocks go?  Obviously no one knew then, and no one knows now, so all we did know was that we did not want to own stocks. We wanted to be sellers, not buyers. Go to cash and ask questions later, type of mentality.

We've looked at declines in Crude Oil and widening credit spreads as a gauge for what to expect out of stocks. We've been monitoring market breadth for evidence of confirmations of declining indexes or whether they're diverging from them. These internals studies and intermarket analysis techniques are great and incredibly helpful in any environment. But today I want to focus on specific prices levels for the two most important indexes in America. 

Autos were some of the worst performers in 2018, and new lows on a relative basis to start 2019 suggest the first quarter may bring more of the same for this sector. This post will outline why we want to continue to sell strength in this sector, as well as the best ways to express this theme.

Below is a chart of the Nifty Auto Index hitting new 52-week lows relative to the Nifty 500. This trend of under-performance has been intact since early 2017 and appears to be heading back toward the lows it set in 2012-2013.

Click on chart to enlarge view.

This is going to be a quick post, but I noticed a chart during my analysis that was too nice not to share. It just so happens that it's a great example of how a stock should act when transitioning from a downtrend to an uptrend.

I spent the New Year in Lake Tahoe, which is one of my favorite and most beautiful places in the world. Heading up to the lake with family and friends for a few days (and leaving my laptop at home) really helps clear my head and let's me focus on the environment we're currently living in. I see again and again people trying to compare today's market to "the average" of a dozen or so bear markets in the past. It's painful to watch.

It's hard to remember a time where I saw this much irresponsibility among investors, especially the pros who should know better. These "asset managers" are so busy dealing with investors, compliance, operations, marketing, regulations and whatever else they're busy doing, that they've completely underestimated the amount of risk in the stock market. It's like they forgot that risk is a real thing.

And what are they doing to justify their actions, or lack thereof? They're relying on a tiny sample size of prior market declines to "wait and see" what happens. They think they're "Portfolio Managers", but they should be "Risk Managers". There's a huge difference.

From the desk of Tom Bruni @BruniCharting

The media has been making quite the ruckus about 2018 and the "historic" volatility that the US Stock Market experienced, particularly in the fourth quarter. In this post I want to look at a few simple stats that help to put this past year's performance into its proper historical context, so that we can see whether or not it truly was a crazy year for stocks.

Just as the final week of the year -- the days between Christmas and New Year's Day -- are generally to be avoided by anyone looking to put new options trades on, so too are the first couple trading days of any new year. Especially this one. It was highly unlikely you were going to make your year by trading during the holidays, and similarly, there's no reason to believe that any trades you nail on the first trading days of 2019 will be memorable this time next year.

As I type this at 12:45am ET, overnight S&P Futures have already traded as high as +34  and as low as -25 from Monday's close. And I expect further indecisiveness to be pervasive during the first two full trading days in 2019. Sure, the nimblest of day traders likely will have a lot of action this week to make it worth their while, but those of us looking to put on options spreads with several weeks or months until expiration will best be served letting some of the nuttiness of the first 48 hours shake out. As such, we'll be sitting on our hands until the end of the week, waiting until Friday to put on our first new position of 2019 (stay tuned!).