From the desk of Tom Bruni @BruniCharting

Bonds, Gold, and Defensive Stocks like Utilities, and Cash have been our defensive playbook for the last month.

We've made it clear over the last few weeks that we don't want to be long stocks given current conditions and think there's downside risk from a short-term perspective, despite the structural picture remaining largely unscathed.

Given last week's slight downside follow-through in US Stocks, I wanted to share two breadth charts from our Market Internals Chartbook that summarizes current conditions well.

From the desk of Tom Bruni @BruniCharting

Cocoa isn't getting a lot of attention right now given all the other things going on in the world, but we think it should be.

In this post, we want to outline a trade that's setting up and how we're going to take advantage of it.

Today we wrote a post discussing the concept of relative strength and how it's kept us on the right side of several trends over the last few years.

Now we're going to apply that analysis to the Nifty Media sector to identify if the struggling group is nearing a turning point.

Let's take a look.

Relative strength is one of our primary tools as Technicians, but we're not talking about the Relative Strength Index.

Instead, we're talking about the relative performance of one security relative to another. By identifying those assets that are outperforming or underperforming, we know which have institutional support and which do not. Institutions are looking for relative strength and momentum

Much like the Relative Strength Index, we utilize this tool as a confirmation tool for price. When relative strength diverges from price, we can identify potential turning points in the trend.

Let's take a look at a few examples.

From the desk of Tom Bruni @BruniCharting

With over 5,000 ETFs trading globally, there have never been more vehicles out there for a market participant to choose from, each with their own spin on a traditional asset.

Today I want to take a look at two WisdomTree ETFs that put what's becoming an ever-more popular spin on the vanilla Emerging Market and China indexes out there.

Although I'll briefly discuss the goal/methodology of these vehicles, our primary goal is to look at them from a Technician's perspective. What does this ETF's construction mean for the underlying holdings and exposure it's providing, and more importantly, its effect on price action? 

The near-term issues we're seeing in the broader market make this an interesting environment.

On the one hand, there's reason for caution as breadth and momentum concerns weigh on the leaders and major indices but on the other hand, there are still plenty of opportunities for those with short-term time horizons and those with longer-term ones. Our primary intermediate-term timeframe is where things get messy.

With that said, let's take a look at two stocks we discussed during our Members-Only Conference Call earlier this week as they test key levels with mixed results.

From the desk of Tom Bruni @BruniCharting

We've been fading gold since September for a variety of reasons, but primarily due to the overwhelming amount of selling being done by Commercial Hedgers.

While many of those conditions still exist our risk management for this thesis has always been Gold closing above 1,600.

This week we're getting that, so let's take a look at what's next and how we're taking advantage of it. 

From the desk of Tom Bruni @BruniCharting

This post is a follow-on to this week's "Chart of The Week" which covers the recent breakout in Gold.

Here we'll take a macro look at the Precious Metals space, update our thesis, and outline the best ways to take advantage of it.

Despite our cautious outlook for Equities, there's one stock setting up for a potential short squeeze...and the skewed reward/risk has gotten our attention.

Let's take a look.

We've been outlining our thesis for weakness in Indian Equities for over a month now, but that was a tactical call within the context of bullish longer-term picture.

Unfortunately, with the last week or two of action, we've seen an expansion of stocks participating to the downside which suggests this near-term weakness could continue for the rest of the fourth quarter. Rather than the weakest stocks catching up to the leaders, the leaders are now catching down to the weakest names.

Let's take a look.

We've been outlining our thesis for a choppy environment in stocks both in India and globally for several weeks now and evidence continues to build that the market agrees with us.

With weakness in the broader market, sectors and individual stocks that have not participated remain at risk to lead to the downside.

Today we're looking at the Auto sector, which looks vulnerable to a swift 10% move to the downside if support at its multi-month lows breaks.

We've been highlighting the relative strength of certain Gas names in the Energy space since August, and they've worked wonders on the long side.

Although we've issued several tactical updates since then (December and January), I wanted to use today as an opportunity to revisit this thesis and update our approach given many of our price objectives have been hit.