It’s the end of the month so you know what that means: Brand new freshly completed monthly candlesticks for us to review. While I normally use weekly charts to get structural perspective on markets and then daily charts for tactical purposes, the monthly chart review is done at the end of each month to help identify the primary trends around the market. This is for us who want to avoid the day to day noise surrounding politics or the Fed or whatever news story is being sensationalized this week.
Most of you who know me already know that I incorporate a top/down, weight-of-the-evidence approach. It’s not just 1 chart or 1 indicator that says to be long or short the stock market. It doesn’t work that way. For me, I put in the work, weigh ALL of the evidence, and then put together a thesis. From there we then look to execute. Since March, however, a more neutral approach towards stocks has been my big theme. As we come into May, I see no evidence that suggests changing that strategy. Cash heavy still makes sense until the data changes and points to allocating that cash once again, long or short.
Today I want to go over a chart that I think the US Stock Market bulls are going to love. To me, it is potentially the most bullish chart in the entire world. [Read more…]
For me it’s not just about buying a group of stocks, but about buying the strongest members of that group. I am a firm believer that by erring on the long side of relative strength or erring on the short side of relative weakness, the odds of a continuation in trend is much greater than the odds of a reversal. Therefore, there is a higher probability of success by following trend, rather than trying to fight trends. So today I want to talk about how we’re going to take this top/down approach and apply it to find profitable trades this month in Energy stocks. [Read more…]
With volatility spike in British Pounds, the more interesting story to me is how stocks are pushing up against the former all-time highs in 1999. Since that historic era in the stock market, British stocks have continuously attempted, and then failed to break through and finally make a new all-time high. The London FTSE 100 has been trying to stay above that historic market peak for almost 17 years.
Here is a chart of the London FTSE 100 going back to the late 1990s. The more times that a level is tested the higher the likelihood that it breaks. The reason is that there comes a point where anyone willing to sell at those levels will have already sold, ultimately leaving fewer sellers than buyers. This is when you get a “breakout”: [Read more…]
We take a weight of the evidence approach here at All Star Charts. There is no one data point that will suggest buying is more advantageous than selling, or vice versa. In addition, the process of collecting and reviewing that data, to me, is really the most important thing I do. There are no short cuts in this business. You have to put in the work and I share the results of that homework with you daily so you don’t have to.
Today I want to point you to a chart that I’ve kept for a while, but have never really shared because I don’t want to overwhelm you with too much data. But since we’re at a critical point, I think it’s worth adding to the Chartbook this week: [Read more…]
One of the benefits of it being 2016 is that global markets are more interrelated than ever before. We can take price data from the other side of the world and use it to take advantage of domestic markets in the United States as well as many other countries and asset classes. To purposely ignore what is taking place in markets around the world seems irresponsible at this point.
Today we are watching what Latin American stocks are suggesting for the next direction in Crude Oil prices: [Read more…]
Since the Summer of of last year, the relationship between growth stocks and value stocks has been ironing out what traditionally might be considered a major topping pattern. This would suggest that value stocks should outperform growth moving forward. Last month, however, this ratio confirmed what looks to me like a failed breakdown and bullish momentum divergence. In my experience, this is an ideal recipe for a squeeze higher in the spread. [Read more…]
When you talk about the “stock market”, there is so much more to it than the S&P500 or what the Dow did on a given day, week or month. These are just 2 popular indexes in the most popular country in the world. But in reality, that’s all they really are. One of them, the S&P500 is cap-weighted, so the biggest companies in the world, $AAPL $FB $XOM etc, drive the direction of the index. The other, the Dow Jones Industrial Average, is made up of just 30 humongous American stocks. That’s what these things are.
The actual stock market, or “market of stocks”, includes many more stocks and indexes, not just in the U.S., but globally. Today I want to talk about what we’re seeing out of the Financials in Europe and what the implications of the recent behavior might be. [Read more…]