Over the next month I will be giving several technical analysis presentations on the east coast and all of you are invited to join me. Some of you have seen me give these before, so just know that they are all different. I try and tailor the educational content to the current market environment that is obviously always evolving. Here are the upcoming dates and details:
In honor of Superbowl 50, we created a countdown of what we consider to be the most important 50 charts in the world. These include U.S. Stocks and Sectors, International Indexes, Currencies, Commodities, Interest Rate Markets and Global Intermarket relationships. Some of these are more actionable than others, but collectively I think they truly tell the story of global market risk, or risk aversion for that matter.
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In honor of Superbowl 50 I share with you what I think are the best 50 charts in the world. The hashtag on Twitter to follow along is #SB50Charts. Here is the entire list in order. Click the link inside the tweets for comments on each chart.
Momentum is a word that gets thrown around a lot. I personally like to measure momentum using a 14-period relative strength index (see here), but different people have different definitions. Fine. For today, we'll argue that "momentum" stocks are those listed in the MSCI USA Momentum Index. Looking at these stocks as a group, I think they are going to continue to get destroyed going forward, particularly relative to the rest of the market.
First of all, forget this whole FANG thing. I don't know who made that up or why people like to limit it to just 4 stocks. I think it's stupid. They have nothing to do with one another and there should be others included in the list. In fact, in November I wrote a piece about how FANG stocks are this cycles Four Horseman (See here) and was further evidence at the time that made us very bearish U.S. Stocks heading into December and January. That obviously worked out very well.
There is much more to life that what the Dow did yesterday. Every week we go chart by chart looking at all of the major U.S. Stock Market Indexes. This analysis includes the S&P500, Dow Jones Industrial Average, Dow Jones Transportation Average, Dow Jones Utility Average, Nasdaq100, Russell 2000, Mid-Cap 400, Russell Micro-cap Index, etc.
All of these charts have been updated on both Weekly and Daily timeframes in the Chartbook and these are a few of my notes from this week's analysis including some updated risk vs reward levels:
Please note: this is multi-timeframe analysis looking both long-term and short-term. Defining who you are as an investor
, particularly your time horizon, is especially important at this point as, for the most part, the weekly charts and daily charts are telling different stories because they are on different time frames.
This week I was driving home and flipping through radio stations on Satellite and I stopped to listen in on what was happening on the financial tv networks. I just learned this week that financial tv networks air their tv stuff on the radio too. Fun fact. Anyway, the topic was about Amazon earnings and how bad tech companies are doing. Not sure what Amazon has to do with technology? This was a stock market show. Amazon is a Consumer Discretionary stock. It's actually the largest component of the Consumer Discretionary sector and is not even listed in the Technology Sector Index. Still, on and on they went about Amazon being a technology company. It made no sense.
Guys, I get it. We can sit here all day talking about what great technology Amazon has, and AWS is so great, etc etc. Yes, I know. But we're talking about the stock market here, are we not?
With global equity markets looking poised for a tactical bounce in the week(s) ahead, one market in particular looks ripe for a potential squeeze higher.
South Africa has been in a strong downtrend since breaking down from a symmetrical triangle late last August. Selling quickly accelerated after a major support level near 51-52 broke shortly after the breakdown from, and retest of, the symmetrical triangle. Last week prices traded through another major support level near 40 and swiftly reversed to close the week back above it while momentum diverged positively.
On Monday afternoon I was over at the Bloomberg West headquarters as a guest on their 4PM show "What'd You miss?". This is a show that I've appeared on a few times from New York, so it was cool to see their San Francisco studios. My take is that the snack bar in the Lexington Avenue building in New York is much better, but the view of the Bay in San Francisco beats the view of Queens, NY all day. So we'll chalk it up as a tie.
Anyway, last time I was on the show back in December we wanted to be short the S&P500, Apple and Emerging Markets while simultaneously buying U.S. Treasury Bonds. This has worked out very well over the past month as stocks got crushed to start the year, so we couldn't be happier. Now, although a lot of our tactical downside targets were hit last week, including Apple into the low 90s, structurally things have actually gotten worse. I think going forward, any strength should be used as an opportunity to sell into and much lower prices are coming for U.S. Stocks.
This is a great piece from the desk of Tom Bruni @brunicharting
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Approaching Tactical Bounces In Bear Markets
During market corrections, correlations tend to go to one across asset classes, but more specifically global equity markets tend to move together. Throughout the global equity markets and U.S. sectors I follow, many tactical downside targets were met with momentum diverging positively, suggesting a relief-rally may occur over the next few weeks. Many of these markets followed up their mid-week reversals with follow through to end the week, which adds to the case for additional upside over the short-term. It's important to realize though that most of these moves are occurring within the context of structural downtrends / bear markets, which means this bounce is just that for the time being. Significantly more time will be needed to repair the long-term structural damage these markets have experienced.
Going country by country all over the world is one of the best tools that we have as market participants. The value that I’ve gotten over the years from looking at the behavior of all of the countries, instead of just the U.S. is a huge factor in why I am such a top/down weight-of-the-evidence guy. There are signs of strength and weakness that we see from international markets that might not be so obvious in the S&P500, for example.
Last September, I promise you that the reason I got bullish tactically was not because of what I was seeing in the United States, but what was happening around the world. There were simply too many bullish momentum divergences and downside objective achieved internationally to ignore. Something was up, and in fact, the counter-trend rally that we got in the U.S. actually exceeded my expectations.
