We're finally here! Allstarcharts India is now available to everyone and anyone interested in the share market of India. This has been one of the most incredible experiences of my life - learning about Indian markets, the people and the culture. I am currently here in Delhi and will also be traveling to Mumbai to both celebrate the new launch and to continue my pursuit of knowledge and experience. I will be giving a live presentation at Bloomberg in Mumbai Thursday January 11th and you can register for that here if it's not already filled up.
We want to go into 2018 forgetting everything we thought we once knew. The process of approaching every market with an open mind is something that I think is very important. Our goals of profitability need to outweigh any emotions driven by ego.
I've been very critical of Gold, Silver and Precious Metals stocks since the Summer of 2016 when they hit the upside objectives we gave them earlier that year. Since then, it's been a sideways mess, with fast moves lower and abrupt mean reversions higher. These are characteristics of messy markets, not trending ones like U.S. Stocks were for example since, coincidentally (I doubt it) that Summer of 2016.
Today we're going to go over the best risk vs reward propositions in the Gold market as we enter 2018:
It's hard not to reflect on the past 12 months as we celebrate the New Year with our friends and family. For me it's both a blessing and a curse. While it's exciting to begin 2018 on a fresh note, I really didn't want 2017 to end. It's been an amazing year of learning and growing as an investor and a business man. It's not easy, but every challenge brings its own lessons and rewards. It's never a loss if you can learn from the experience.
Today I wanted to share what I'm thinking about the past year and what I'm expecting as we enter 2018. I do this because I believe it's therapeutic to put thoughts down on paper. I encourage everyone to keep some sort of journal, whether in a public forum like me or private. It's also important to me to continue to think out loud so readers can better understand where I'm coming from. I think we always need to know who is writing and producing the content we are consuming. Whether it's via text, audio, video or otherwise.
The best hour I spend each month is going over my Monthly Candlestick Charts. I can't understand how some people don't do it. Think about it: 12 hours of your life per year. Imagine all the things you do throughout the year that takes you 12 hours and probably does you more harm than good.
If you forget everything I ever tell you, please just remember not to ignore the monthly candlesticks. It doesn't matter if you're a short-term trader or longer-term investor or anything in between. Getting longer-term perspective and identifying the direction of the primary trend is the most important thing we do. Once that has been determined, then we can incorporate multiple timeframes to break it down to our time horizon of choice, whether it's more intermediate or short-term.
Since November is now in the books, it's that time of the month to rip through a ton of Monthly Candlestick charts. Here's what I'm seeing out there:
It was Thanksgiving last week and the hot topic all over dinner tables throughout the world was about Bitcoin. Older relatives asking younger nieces and nephews to explain crypto-currencies was probably something pretty hilarious to watch by being a fly on the wall of many households.
In the spirit of the holidays, I thought I would post a couple of charts that I think are worth sharing with those family members and friends who are coming out of the woodwork asking about the not so new asset class. While I don't particularly care about the actual technology behind blockchain, I do think it's important to focus on the behavior of these markets. This is how we can responsibly calculate risk vs reward propositions. That's what this is about at the end of the day right? We're here to make money.
We're here to make money in the market aren't we? Some people want to gossip about tax cuts or who the next fed chair might be. I personally see no absolutely value in this sort of data. In fact, I believe it does more harm than good.
We want to turn the TV off, shut down the twitters and social medias and focus on the only thing that matters: price. The first thing we do is identify what the current market environment looks like. In this process we include stock market indexes in both the U.S. and all over the world, Commodities, Interest Rates and Currencies. Once we have laid out exactly what sort of environment we're in, then we can dig down to the individual sector level and ultimately to stock specific ideas. But all of this must be done after we've identified what sort of environment we're currently in.
Click here to see what the current environment is like today:
It's a busy time of the year for me. I've been given the opportunity to join a panel of amazing analysts at the 2nd annual Evidence-Based Investing Conference put on by my friends at Ritholtz Wealth Management. I will also be giving an hour long presentation at the Chicago Board of Trade on Technical Analysis and the Intermarket Relationships that I incorporate when making decisions about the current market environment. In a few weeks I will be presenting in San Leandro, CA at the Deaf Community Center and we'll have a sign language interpreter there to help us. This will be a lot of fun!
Here are all of the details. I hope you can join me for one or all of these!
The Nasdaq 30 is an equally-weighted index that I created which consists of the 30 largest stocks in the Nasdaq. Collectively these 30 companies represent over half of the entire market capitalization of the Nasdaq Composite. So just like the Dow Jones Industrial Average is a good gauge of stock market strength, I feel that my Nasdaq30 Index offers similar insight but for different types of companies.
Today we’re going to do a deep dive into these 30 Nasdaq stocks. As always I walk through them on both weekly and daily timefames. We want a longer-term structural perspective and then break things down to more tactical time horizon for execution purposes. Then we look at them collectively to weigh whether there is more good or more bad so we can make better, evidence-based decisions.
Every Fall for the past 7 years I've gone to beautiful Coronado, CA for the annual Stocktoberfest conference put on by Stocktwits. Sometimes they even let me get up and show off some of my favorite charts. They know that I rip through thousands of charts a week and I could literally be up on that stage all day talking about markets from all over the world. So this year they limited me to 15 charts in 15 minutes. Let's just say I cheated a little and brought a few more :)
This year's Stocktoberfest was different than the others. Rather than selling tickets, they just invited about 100 investors, analysts, members of the media and VCs to have some fun and share ideas. I liked that it was less formal than other years. It was cool. They did a really nice job.
We don't have to complicate things. It's very simple. If there is actual risk appetite for precious metals, then Silver would be outperforming Gold, not the other way around. The Gold Bugs have little to say at this point, so some of them irresponsibly cherry-pick year-to-date returns to pretend Gold is in an uptrend. Some of them do it out ignorance while others need help selling whatever product preys on the poor souls who believe their conspiracy theories and end of world stories. There's a huge market for that kind of stuff. But for the rest of us who are humbly just trying to turn a profit in the market by managing risk responsibly, we need to look at things objectively.
I'm not sure if you guys noticed what's been going on in Small-caps over the past couple of weeks, but I think it's worth pointing out. First of all, remember this has been a tremendous leading indicator for a long time. I was pounding the table in November about that historic breakout when the Russell2000 Futures engulfed the prior 18 weeks. That was nuts. I said then that we would likely be talking about that event for decades to come. More recently I pointed out the fresh breakout after a period of consolidation. Each of these came along with stocks as an asset class in a healthy environment. They're in an uptrend and they're all in one together. Small-caps have been a great tell for the trend of the markets. If you've been bearish or not as long as you should have been, it's probably because you haven't taken the Russell2000 seriously enough.
Consumer Discretionary has to be one of the most important sectors in the U.S. With Consumer Staples taking a nose dive recently, especially relative to the S&P500, the approach has certainly been "risk on". Severe underperformance out of the Staples historically comes within an environment of rising stock prices. Consumer Discretionaries are typically a beneficiary of this appetite for risk towards equities.
Today we are taking a deep dive look at Consumer Discretionary Stocks pointing out the good, the bad and the ugly. This is a great area to focus on right now because are monster stocks in very clean uptrends as well as disasters that can still be shorted.
