In yesterday's Chart Summit, we presented our view on the major asset classes around the globe and noted what we need to see before getting bullish Equities again. (You can watch the full videos of all the presenters for free.)

Unfortunately, current conditions suggest continued volatility so we're looking for short setups to take advantage of it in the coming days/weeks.

Let's take a look at our broader thesis and what stocks and indexes we're shorting to express it in the market.

Since late March we've been watching to see how the counter-trend rally in stocks would develop...and while a few stocks under the surface continue to rally, the Nifty 50 remains stuck below its 2015-2016 highs and most stocks remain in downtrends.

From the desk of Steve Strazza @Sstrazza

We are always looking at intermarket signals and ratio charts for insight into various asset classes. We've recently written plenty about intermarket relationships that signal risk-appetite, or lack thereof, for stocks as well as others to get a read on yields.

Today's Chart of the Day, High Yield Bonds (HYG) vs Short-Term Treasuries (IEI), is one of our favorite risk-appetite ratios.

Credit Market investors favor High Yield Bonds over Treasury Bonds during the "good times" - periods of strong economic growth, rising rates, etc. On the other hand, we know treasuries are a safe-have asset and outperform in environments where investors are uncertain and want a place to park their capital until the smoke clears.

From the desk of Steve Strazza @Sstrazza

New Mystery Chart!

For those new to the exercise, we take a chart of interest and remove the x/y-axes and any other labels that would help identify it. The chart can be any security in any asset class on any timeframe on an absolute or relative basis. Maybe it’s a custom index or inverted, who knows!

We do all this to put aside the biases we have associated with this specific security/the market and come to a conclusion based solely on price.

You can guess what it is if you must, but the real value comes from sharing what you would do right now. Buy, Sell, or Do Nothing?

A question we're getting a lot these days is when the market ultimately does bottom, do we want to be buying the stocks that have been hit the most or the ones that have held up the best during the market's fall?

As with most things in markets and in life, the answer is it depends. In this post, we'll explain why.

From the desk of Steve Strazza @Sstrazza

Every weekend we publish simple performance tables for a variety of different asset classes and categories along with brief commentary on each.

As this is something we do internally on a daily basis, we believe sharing it with clients will add value and help them better understand our top-down approach. We use these tables to provide insight into both relative strength and market internals.

This week we want to highlight our US Equity Index and Factor tables, as they are both showing near-term reversions in some of the most robust long-term intermarket trends.

Click on table to enlarge view.

Earlier this week we discussed an indicator that uses the 200-day moving average to help identify a sustainable low in Indian Equities.

Today, we've got another indicator we're watching closely. Something we call the Breadth of Momentum measure here at All Star Charts.

Yesterday we published a post titled "The Reality Regarding Real Estate" in which we pointed out the long-term underperformance of REITs as a sector. And although we see no signs of this trend reversing any time soon, when we dug into the space we couldn't help but notice a select group of stocks outperforming not just Real Estate, but the broader market as well.

In this post, we will illustrate the relentless strength from this niche group of Data-Center and Cell-Tower REITs and offer two trade ideas in the space.

We also wrote a post lately in which we filtered the S&P 500 down to just 32 of its strongest performers based on a variety of metrics. Despite the weakness from Real Estate as a whole, five of the stocks on that list are actually components in our All Star Charts Custom Data-Center & Cell-Tower REIT Index.

From the desk of Steve Strazza @Sstrazza

Thanks to everyone for participating in this week’s Mystery Chart. The vast majority of respondents were either sellers or wanted nothing to do with this messy mess of a chart. Some of our less risk-averse participants were willing to bet on a failed breakdown and buy a reversal back above the recent lows.

In our opinion, this is the definition of a structural downtrend and there is very little evidence to suggest that will change anytime soon. With that as our backdrop let's discuss why this chart is on our radar right now.

This is a weekly line chart of Real Estate (IYR) vs the S&P 500 (SPY) looking back about 20-years.

From the desk of Steve Strazza @Sstrazza

In our Table Of The Week, we highlighted some of the strongest stocks in the S&P 500 right now. We showed statistical evidence that these stocks have not only performed better over the long-run, but they've also suffered smaller drawdowns in the near-term.

Despite remaining skeptical of what is still a bear market rally in our opinion, there are always opportunities on the long side, we just need to pick our spots carefully and respect our risk management levels. In this post, we're going to outline trade setups in what we believe are some of the most robust uptrends still in place.

If the market moves higher from here, these stocks should continue to exhibit leadership. If it rolls over, they should hold up better than the average stock and our risk will be well-defined to ensure minimal losses in the case we're wrong.

From the desk of Steve Strazza @Sstrazza

If you read our research regularly you may be sick of this by now, so my apologies. But there is a method to our madness. A tried and true repeatable process that allows us to consistently identify the strongest and weakest areas of the market. Any market. While we've focused mainly on US Equities recently, we can apply these same principles to any asset class.

We have continually highlighted the fact that the long-term outperformers are often also the short-term leaders. Why? Because there is empirical evidence to support this and we know it works. I'll be writing an educational post about this soon.

We've also written a lot lately about how one of the main signals we're looking for before turning bullish on stocks is for the percent of NYSE components to break back above 15%. Well, we're still not really close, but with such drastic daily swings in the major indexes, this could change fast so we want to be ready if and when it does.

Long-term Equity charts and breadth measures continue to suggest a defensive approach towards stocks remains appropriate.

With that said, if you're a trader taking advantage of this volatility then the following charts are those we'd watch to determine if the recent bounce can continue.

From the desk of Steve Strazza @Sstrazza

New Mystery Chart!

For those new to the exercise, we take a chart of interest and remove the x/y-axes and any other labels that would help identify it. The chart can be any security in any asset class on any timeframe on an absolute or relative basis. Maybe it’s a custom index or inverted, who knows!

We do all this to put aside the biases we have associated with this specific security/the market and come to a conclusion based solely on price.

You can guess what it is if you must, but the real value comes from sharing what you would do right now. Buy, Sell, or Do Nothing?