When the major U.S. Stock market indexes are making new highs, you want to see the list of stocks making new highs increasing along the way as well. This had certainly been the case throughout February and March, but has come to a complete halt this month. Looking across the board, the S&P500, Dow Jones Industrial Average, Nasdaq 100, Russell 2000, Mid-cap 400, etc have all made new recovery highs over the past couple of weeks, since our epic bottom in late January/early February. The problem is that 1) all of our upside targets have now been achieved where we wanted to take profits and 2) breadth in the market now stinks. [Read more…]
I think a really important concept that too often gets overlooked is the power of keeping an open mind. Why must we stick to a bearish or bullish stance? What is wrong with neutral sometimes? Just because our upside get hit, does that mean we need to flip bearish and start shorting everything? I don’t think so. I much prefer taking profits when objectives get achieved and then reevaluating once we get more price data. We don’t know what is going to happen tomorrow or next week or next month. No one does. So let’s appreciate the fact that the future is unknown and therefore all possibilities should be considered.
Today’s Chart of the Week represents what I consider to be part of the bullish case for the S&P500 in 2016. I’m not ready to pound the table bullish, or bearish for that matter, but if this one plays out the way it looks, I would argue that it’s a giant feather in the hat for the bulls. This is the mystery chart that I tweeted out yesterday, for those of you who have been asking. [Read more…]
We’ve had a heck of a rally in stocks over since late January, led by emerging markets, energy and metal stocks. Starting in mid-February the U.S. and other developed nations got the memo and started to play catch-up. We couldn’t be happier with the performance of the stock market since then. But over the past couple of weeks all of our upside targets have been hit; all of the U.S. Indexes and sectors and about 90% of global indexes. So I’ve therefore been pretty neutral towards stocks since late last month, but I finally turned more bearish earlier this week.
Here is a market neutral trade that I think is definitely worth paying attention to. Whether you’re bullish or bearish, this breakout is not something we should ignore:
We’ve just witnessed one of the most epic rallies in the stock market that we’ve seen in a long time. Remember, this has been dominated by global indexes, particularly Emerging Markets, not U.S. Stocks. We could not be happier to see this rally progress so well as we’ve been pounding the table to be long since late January. By mid-February, the U.S. and other developed markets put in their bottoms and started to play catch up to the rest of the world. But the underperformance of the U.S. has continued anyway.
Today’s Chart Of The Week represents what could potentially be the start of a major structural improvement for U.S. Stocks: [Read more…]
One of the best ways to be positioned over the past 2 months has been to be in Emerging Markets, not in U.S. Stocks. I’ve been pounding the table on this trade since January and it has really worked out in our favor. The big question today is: Now What? Does this thing keep going, or does the longer-term trend of the U.S. outperforming Emerging Markets resume in the second quarter? [Read more…]
There are a lot of interesting things going on in the Crude Oil market these days from both a long-term and a short-term perspective. Premium Members of Allstarcharts have wanted to be long Crude Oil since mid-February when prices were able to get back above that key $29.60 level. Our short-term upside target was near $38 and this target is being hit this week. Nice little 30% rally. But moving forward, the implications of this short-term move now change the supply and demand dynamics in Crude Oil bigger picture. [Read more…]
With all of the bad news and negative sentiment surrounding the high yield bond market, I think this is a place where we want to be buyers, and no longer sellers. High yield bonds are just a fancy way to refer to “Junk bonds”. At the end of the day, high yield is just that: high yield, because you’re getting paid a higher return for the risk you’re taking by owning junk. Both on their own and relative to the safe-haven U.S. Treasury Bonds, these things have been destroyed over the last few years.
Moving forward [Read more…]
This weekend I did my regular global macro review. This is when I go country by country analyzing the weekly and daily charts of all of the stock markets around the world. Each chart includes a momentum study (14-period RSI) and a 200 period moving average that we use to help with trend recognition. I trade indexes all over the world, simply because I can. Why wouldn’t I? [Read more…]