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?
I got a lot of great feedback on that post and feel that it's a lesson worth reiterating every once in a while, so today I want to share a great example of the constant barrage of information we have working against us as market participants.
Going through our universe of coverage I noticed weakness in the Rupee over the last week, so this post is going to help put that into the perspective of the longer-term trend and outline how we're approaching it.
Marijuana stocks have been an absolute disaster for longs in 2019, but one chart suggests that after a nearly 60% decline, the Horizons Medical Marijuana ETF and its components are set up for a counter-trend rally.
Here's the daily chart we've been using to guide us since the Horizons Medical Marijuana Life Sciences ETF (HMMJ) came public in April 2017. Following a quick double, prices settled into a 21-month range between 15 and 26 that was broken to the downside in late September after a failed breakdown and bullish momentum divergence were left unconfirmed.
After falling 35% from that failure and 60% from its 2019 high, the ETF is now showing signs of waning downside momentum as prices quickly recover from new marginal lows. It's also curious to note that this development is occurring at its IPO price around 10.
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?
Stabilization in European Financials has been a big part of our bull case as they're one of the largest sectors of the Stoxx Europe 600, our broad measure of European stocks, and many individual European countries.
The other aspect of it is risk appetite. If the worst of the worst sectors is catching a bid, then market participants are not likely pricing in the end of the world.
With that in mind, let's take a look at what we're seeing in the space right now and what it means for risk appetite.
Here are European Financials (EUFN) on an absolute basis. After confirming a failed breakdown and bullish momentum divergence by closing back above their December lows, prices rallied nearly 20%, but are now experiencing waning upside momentum.
Today I want to follow up on that post by diving into the Nifty PSU Bank Index components to see if what we're seeing there supports the action that's occurring in the equally-weighted index.
