The Large-Cap indices continue to churn near the highs as Mid and Small-Cap stocks play catchup. Sector leadership remains clear, but we're now beginning to see signs that a former leader turned laggards may start heating up again.

Earlier this week we looked Consumer Goods before they broke out and Technology looks to be showing similar signs of buying pressure.

Let's take a look.

Here's the Nifty IT Index attempting to break back above 16,200 resistance as momentum finally breaks back into overbought territory. If prices can break decisively above resistance then this long-term uptrend could accelerate and target 18,775 over the next few quarters.

Click on chart to enlarge view.

From the desk of Tom Bruni @BruniCharting

Thank you to everyone who responded to this week's mystery chart.

A lot of mixed responses on this depending on their timeframe. Some were shorting the failed move and seeing how it developed, while others were patiently waiting for another breakout attempt to get long.

With that as our backdrop, let's take a look at this week's chart. 

From the desk of Tom Bruni @BruniCharting

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?

From the desk of Tom Bruni @BruniCharting

This week's talk of the town is how Financials, particularly Regional Banks, are rolling over relative to the rest of the market at a faster rate than the Yield Curve is rolling over.

While that's certainly something worth noting, Financials as a group don't really become that interesting until they break out to new all-time highs.

The XLF is close, but not there yet.

Instead, I think the focus should be on the Broker-Dealers & Exchanges ETF (IAI) as it presses up against all-time highs of its own.

Let's take a look at what's happening.

Here's the Broker-Dealers & Exchanges ETF (IAI) holding well above its 2007 highs after a successful breakout retest in January 2019. Today, prices are pushing back up against their 2018 highs as momentum approaches overbought territory on the weekly chart, confirming the strength of buyers. From a structural perspective, there's not a lot to dislike here.

Click on chart to enlarge view.

In an environment where we want to be buying stocks, we primarily want to focus on areas of relative strength. With that being said, we also want to be aware of those areas showing relative weakness so that we can avoid them on the long side and short them when the environment is more conducive to shorts.

One clear area of weakness remains Nifty PSU Banks, so let's take a closer look at what's going on.

From the desk of Tom Bruni @BruniCharting

The dash to trash is a big theme in the first two weeks of 2020, with names like Beyond Meat (BYND) and other beaten-down IPOs from the last year catching a bid and working their way higher.

We've been focusing a lot on the Marijuana sector over the last month because the ETF and many individual names are at levels where it would be logical for a reversal higher to begin.

Today we want to reiterate that potential and highlight two of the largest stocks in the space that are both liquid and offering a skewed reward/risk at current levels.

There's a household name setting up for a bullish breakout to all-time highs sporting the lowest implied volatility in options prices in nearly three years! How do I not play this one?

These are my favorite types of setups and I get to play them simple.

The Large-Cap indices continue to churn near the highs as Mid and Small-Cap stocks play catchup. Sector leadership remains clear, but we're now beginning to see signs that a former leader turned laggards may start heating up again.

Let's take a look.

Here's the Nifty Fast Moving Consumer Goods Index attempting to break back above 31,000 resistance as prices reverse from their lows and momentum diverges positively. If prices can break back above that resistance then this long-term uptrend could accelerate and target 39,000 over the course of 2020.

Click on chart to enlarge view.

From the desk of Tom Bruni @BruniCharting

Thank you to everyone who responded to this week's mystery chart.

Most people were sellers of this one, while some were staying away fearing a whipsaw.

With that as our backdrop, let's take a look at this dumpster fire.

Typically when looking for trades we're searching weeks and months out, but occasionally the reward/risk in a setup justifies trading the shorter-term timeframe.

Today, that trade is Natural Gas.

From the desk of Tom Bruni @BruniCharting

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?

From the desk of Tom Bruni @BruniCharting

This is a quick follow-up to our last two posts on Canada (September 16 & December 10), updating our views and adding any new trade ideas for today's environment.