We held a free webinar this week to show off our new ChartBook and discuss how to best invest for 2016 using intermarket analysis. At All Star Charts, we use a global top/down approach in order to take the weight-of-the-evidence in Stocks, Commodities, Currencies and Interest Rates to come up with a theme. Once we have a major global theme, we will break it down to specific U.S. Sectors or Country ETFs and either buy or short individual ETFs or stocks to express our theme using strict risk management procedures [Read more…]
In this week’s members-only letter we discuss the following topics:
- The Sell-off to Start The Year Is Perfectly Normal and Was To Be Expected
- What Do We Do With Apple Stock?
- Where Is The Best Risk vs Reward Now?
- My Favorite Emerging Market Short
- Where Do We Buy Crude Oil?
- Solar Energy Stocks Are What We’re Most Interested In
- What the Strength In Utilities Is Telling Us
With all the noise surrounding the recent sell-off in the U.S. stock market, it can be easy to forget that there are some areas of the market doing much better than others, and there is a lot of money to be made in the widening of those spreads. This is where intermarket analysis and ratio analysis can really become profitable for a portfolio. Today we are looking at the biggest companies in America, as a group, breaking out to new highs relative to the smallest companies in America: the Micro-caps.
What this ratio tells us, as investors, is the direction of the flow of money. Are institutional dollars flowing into the riskier, smaller companies in the stock market, or is it going into the larger, more traditional, relatively safer segment of the market that is, the Mega-caps. To me, there is no better gauge out there for the Mega-caps other than the old Dow Jones Industrial Average. The 30 components that make up this Index are 30 of the largest companies in America: Apple, Microsoft, Exxon, JNJ, General Electric, etc. When we compare this group to the Russell Micro-cap Index, we get a very clear picture of the direction of money flow.
Here is a 10 year chart [Read more…]
This week I sat down with Frances Horodelski over at Business News Network to discuss the disastrous implications of a breakdown in the Dow Jones Industrial Average below last week’s lows. Apple continues to be a ‘sell on any strength’ stock and an inversion of the yield curve is likely to come next year.
Here is the video in full: [Read more…]
This week I had the opportunity to join Joe Weisenthal and Alix Steel on Bloomberg’s What’d You Miss? On this appearance I wanted to follow up on our Apple discussion over the Summer when I warned that a break of key support would lead to a much bigger problem. This is precisely what occurred in August and since then this stock has continued to be a sell on any strength. Looking bigger picture, Bonds keep outperforming stocks as they have for the last 2 years and still think this trade keeps working. We also touch on the yield curve where if 10s minus 2s break 1.20, then I think the next stop is an inversion of the yield curve.
Here is the video in full: [Read more…]
Thank you to everyone who registered for the new All Star Charts membership. I’m super excited to have you guys as part of our team. Remember, we’re all in this together trying to navigate through this market day in and day out. It’s a puzzle that is constantly evolving and what we’re here to do is look for major trends around the world and then break those down to find more intermediate-term investing opportunities based on those structural setups. The new All Star Charts was an idea we’ve been working on for a long time, so we couldn’t be happier to finally be able to share the ideas and the homework that I already do with all of our new members. Welcome to our club!
For the past 2 months I’ve been very vocal about how there’s been no reason to own the major U.S. Stock Market Averages. If there’s been any trade to be made, it’s [Read more…]
We have a lot going on these days here at All Star Charts, but I wanted to put together a conference call to get us all in one room and discuss what I think are currently the Best 10 Charts in the World. Most of them come along with a few more charts or data points to either help tell the story better or help with tactical risk management procedures.
Going forward only Members of All Star Charts will have access to these monthly conference calls as well as the intra-month conference calls whenever market volatility dictates.
Start your 30-day Risk-Free Trail Today: All Star Charts Premium
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I don’t know what’s going to happen tomorrow or next month or next year. No one does. But today I just want to keep it real and bring up an interesting development that is difficult for me to ignore. It’s no secret that the stock market currently has terrible breadth as only a handful of names were able to make new highs a couple of weeks ago and the only index to make a new high was the Tech-heavy large-cap Nasdaq100. The rest of them all put in lower highs (which is characteristic of a downtrend).
As the cliché goes, “This is a market of stocks, not a stock market”. But cliché or not, it’s true, and also under appreciated. When the market as a whole is making new highs, you want to see that being confirmed by a larger number of stocks and sectors also putting in new highs. The last thing you want to see is the opposite, as we are seeing today (and in the Fall of 2007 coincidentally?). If you recall, as the major averages were hitting new highs in October of 2007, only a few individual stocks were still hitting new highs. A popular group of those were being referred to as “The Four Horsemen” at the time as they were some of the only names still holding up. This group included, Google, Apple, Amazon and Research in Motion (Blackberry).
I remember this time very clearly as there was an ongoing joke at work that if you weren’t trading these 4 names, why bother even coming in? This is strictly anecdotal, of course, but an interesting coincidence that the media is constantly referencing a new group of stocks called “FANG”. The label for this group may not have been made up yesterday, but the frequency of mentions continues to grow. The FANG stocks include Facebook, Amazon, Netflix and Google. The question I pose today: Is FANG this cycle’s Four Horsemen?
I don’t know the answer and neither does anyone else reading this right now. But I find it very difficult to ignore the similarities between these two groups of stocks. Remember, like the 4 Horsemen, these FANG stocks have nothing to do with each other. Sure, they’re in the Internet space. They are each part of the Dow Jones Internet Index which is the only sector I see still hitting new highs recently (I guess Twitter’s stock must have not gotten the memo).
Take a look at each of the FANG charts. Then take a look at how many stocks are hitting new highs compared to how many were doing so a year or ago and a year before that. Compare this lack of participation sort of environment to that in 2007. Also look at the opposite scenario in the first quarter of 2009, where most stocks and sectors had already bottomed out in the 4th quarter of 2008. The “Market of stocks”, if you will, bottomed out in Q4 2008. It wasn’t until March of the following year that the indexes themselves put in their ultimate lows. To me we are looking at the opposite scenario today.
What do you guys think? Am I way off or perhaps on to something here?
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