If you look through all of the commodities on the Multi Commodity Exchange of India I think you'll find more opportunities today than at any point in the past year. I'm finding the best risk vs reward propositions in the metals and energy space specifically, not just in India but all over the world.
Today we're taking a look at Gold specifically because I think it offers one of the best risk vs reward propositions on the entire exchange:
Life is not just about stocks! There are plenty of opportunities in the commodities market and I think today is no different. In fact, we're seeing more ways of making money on the commodities exchange in this current market environment than we have throughout the past year.
Today we're diving into the MCX to isolate only the best risk vs reward opportunities. These will all be added to the Chartbook in the coming days/weeks. Here are my notes and trade ideas for now:
One of the things that often gets underrated is the power of simplicity. What's wrong with only looking at price and focusing in only on what matters most? I get that you love your moving averages and candlesticks and all sorts of momentum indicators. But the most important indicator is still price. So that's what we're going to look at today using OHLC Bar Charts.
I get asked all the time, "JC why should I care what's happening in Finland or Canada if I'm just trying to make money in stocks here in India?"
This is certainly a valid question and one that I think we need to address here before moving any further. Let's remember that this is a "market of stocks" and not just a "stock market". In other words, while things like the NIFTY50 and the S&P500 are indexes and a good gauge for the health of the overall market, there are many individual components that make up these averages. Oftentimes, that gets lost in the shuffle.
When you rip through 5000 charts a week you start to notice a few things. One thing that has caught my attention recently is the fact that there stocks just now breaking out of 20 year bases. These aren't some irrelevant micro-cap companies either, these are stocks that are literally representing some of the most important industries in America. It's hard to ignore these developments and I think it points to further strength in the U.S. Stock Market this year.
Stocks aren't breaking down from major tops. We saw so much of that happening throughout 2007 that it became almost impossible not to be short equities in 2008. Today we are still seeing the exact opposite: breakouts from major bases, multi-decade bases in some cases. Today I'm going to point out 3 very important stocks that are just now coming out of historic consolidations.
Chart Summit 2018 is finally here. We could not be more excited for this event after the unbelievable experience we had last year! In January of 2017, I called up a bunch of my smartest friends and put on the first ever 100% virtual conference on Technical Analysis, and it was FREE! We had over 10,000 attendees from over 100 different countries. The feedback I received immediately after the event was like nothing I had ever seen before. I couldn't believe it.
If you missed last year's event, you can still watch the videos of those presentations here and I highly encourage you to do so. We had traders like Peter Brandt, Brian Shannon and Joe Fahmy explaining their approach and best ideas. Top Wall Street Analysts like Ari Wald, Jonathan Krinsky and legend Gail Dudack showed the world how they look at markets and what sorts of things they were showing their buy side customers at the time.
When an asset class is in a bull market, it not only goes up in value, but it also outperforms other asset classes. So it's not just about the absolute performance, but about the relative performance as well. When stocks are going up, they'll outperform things Bonds or Gold, for example. In emerging stock markets, it's no different. When stocks in India are outperforming US Stocks, that is when I consider the bull market to be in full stride.
Today I want to point to an important development in the NIFTY50 relative the S&P500. This is how we can see if stocks in India are in a real uptrend, or just a market rising with the tide.
All-time highs across the board in Small-caps these days. Some are in shock. I personally just don't understand why stocks that are in uptrends going up is anything outside of perfectly normal? I would argue that any other result is what we should consider unusual. If the market teaches us one thing is that trends are much more likely to continue than to completely reverse.
In September I put out a post about small-caps breaking out of year long bases. If you recall, at the time, the sentiment around the market was about how high stocks were and how they could not go much further. My argument at that point was the exact opposite. Small-cap stocks had done nothing for an entire year. To suggest the stock market was too stretched was irresponsible, in my opinion. Not only did we want to be long stocks, we wanted to be "very aggressively long" equities.
This week has been an incredible experience in India! If you had the chance to make it to my presentation at Bloomberg in Mumbai Thursday I really do appreciate you coming. I may be the one presenting my thoughts on local markets, but trust me, I'm the one winning at the end. The conversations and interactions with traders here has been extremely eye opening and educational. This is how I learn - by talking with people smarter than I am. It's not hard to find that around here. So from the bottom of my heart, thank you!
Many of you have asked for the slide deck from the presentation so here you go:
This week has been an incredible experience in India! If you had the chance to make it to my presentation at Bloomberg in Mumbai Thursday I really do appreciate you coming. I may be the one presenting my thoughts on local markets, but trust me, I'm the one winning at the end. The conversations and interactions with traders here has been extremely eye opening and educational. This is how I learn - by talking with people smarter than I am. It's not hard to find that around here. So from the bottom of my heart, thank you!
Many of you have asked for the slide deck from the presentation so here you go:
