Stocks got hit nicely this week and we did very well in our bond positions. So where do we profit next? [Read more…]
Uptrends In Stocks Are Falling Apart
We’ve been very clear about how we wanted to avoid owning stocks this month. Fortunately, bonds have been the beneficiaries of the relentless selling in these stocks. Nothing has changed for the positive. But it’s actually some former leaders completely falling apart that now has my attention.
Remember when Industrials broke out to new all-time highs? We said that as long as that was the case, how bad could things be? Well, Industrials are no longer above those former highs and actually just broke down to new 10-year relative lows. This is behavior consistent with an environment where we want to be selling stocks, not buying them: [Read more…]
The Risk In Owning Stocks Is Elevated
The risks associated with owning stocks are currently elevated.
There are a lot of things I can say, levels I can point out, possible outcomes I can walk you through, all those things. But the one common denominator between all of those is that the risk in owning stocks is currently higher than it normally is.
This is an important time to remember your original investment objectives, time horizon and risk parameters. Before buying a stock, or entering any investment for that matter, these 3 questions need to be answered. I can’t answer them for you. But what I can do is show you what we’re seeing from an intermediate-term horizon.
Our goals here are to make money this quarter. We care about the coming weeks and months. It doesn’t matter to us what the market does next year, and it doesn’t matter what it does today. Weeks and Months. That’s our focus.
For this time horizon, the risk of owning stocks has been elevated. I believed the weight-of-the-evidence had been leaning this way the past month, but we’re just now starting to see it affecting large-cap stocks. We’ve seen the deterioration of market breadth since mid-January. We’ve seen the flight to safety bid in Bonds. And now we’re seeing breakouts that Stocks had been attempting failing all over the place.
Here is a perfect example of what’s happening. The S&P500 had one last push through our key 3300 level until completely collapsing back below it. And this wasn’t like a small correction either. This was a weekly gap lower. How I learned it, this is a potential breakaway gap, suggesting this is just the beginning, and no where near the end, of the selling pressure: [Read more…]
Here Come Higher Bond Prices
Over the past month, Bonds are up a bunch as the collapse in Interest Rates has resumed. We jumped on board this bond trade last month and so far it’s working.
Meanwhile, a majority of U.S. stocks are actually down over the past month. While the S&P500, Dow Industrials and Nasdaq100 have gone on to make new highs, the NYSE Advance-Decline line (stocks only) did not, Small-caps did not, Dow Transports did not, and a majority of individual stocks did not. It’s only a minority of names doing the work, particularly large-cap stocks and some higher dividend paying areas like REITs and Utilities.
When you run the numbers, most stocks in the U.S. are down over the past month, with negative average and median returns for the Russell3000 components. It’s the bonds that are up and I think they’re just getting started.
Today’s chart focuses on the Intermarket Relationships we lean on to supplement our absolute price analysis. With rates rolling over again, are stocks and commodities confirming what the bond market is doing? In a simple answer: Yes! [Read more…]
Media Appearance: Raising Cash Now Is Prudent
As you guys know, we’ve had a much more defensive approach to the stock market over the past few weeks, especially compared to how bullish we had been for so long. There is a time to be big and aggressive and a time to be small and cash heavy. I believe we’re currently in the latter of those two categories.
Here’s the clip in full: [Read more…]
[Premium] Monthly Conference Call Video Recording February 2020
There is a lot going on in the market right now, not just in the U.S. but globally. The intermarket relationships between Bonds, Gold and the US Dollar are having a major impact on equities.
January is a month that gives us a lot more information than most other months throughout the year. We have the data now that we can use to help us identify primary trends.
Volatility is picking up. Daily swings are getting larger. I’ve seen this story before.
We discuss all of this and a lot more.
This is the video recording of the February 2020 Conference Call.
*NOTE: This Post and Video was originally intended for Premium Members of Allstarcharts Only. But due to the circumstances, we have unlocked it for everyone to watch and download the slides. We feel this can be used for educational purposes moving forward. Thank you for understanding.
4 Important Levels To Trade Against
This week I sat down with Irusha Peiris of Investor’s Business Daily to talk markets and life lessons.
I was invited on to the Investing with IBD Podcast where we discussed the current market environment, including US and International equities. We talked about interest rates and their intermarket relationships with other asset classes like currencies and commodities. Most importantly, in my opinion, I lay out 4 very critical levels, in 4 indexes specifically, that I think will be the biggest hurdles to jump over in order for stocks to continue higher.
This was a fun conversation.
Here’s the interview in full: [Read more…]
Allstarcharts Weekly: Rotation Into Fixed Income
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!
[Read more…]
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