This past week during our first Conference Call of 2019, we discussed the continued lack of direction in the indexes and how the relative strength in Financial Services and Consumer Goods stocks was being offset by the weakness in IT and Energy.
By Friday we finally saw some rotation back into Energy, but there are signs that the major indices won't be off to the races just yet.
Tuesday I posted a mystery chart and asked you all to let me know what you would do. Buy, sell, or do nothing. Many said that it looked like a downtrend and that a neutral/bearish approach appeared best. I agreed.
So today, I want to reveal the full chart and share why I feel it's relevant.
One of my favorite exercises in our process is the use of "mystery charts." Essentially, we take out the x and y-axes and and all labels to eliminate any biases. The chart can be any security in any asset class on any timeframe on an absolute or relative basis. It can even be inverted.
The point here is to not guess what it actually is (though most of you will try), but instead to think about what you would do.Buy,Sell, or Do Nothing?
It's a great trade idea, but it also is a great reminder that while the major stock market indexes may not be trending, there's still plenty of opportunity on both the long and short side of this "market of stocks".
The Public Sector Bank Sector of the Indian Stock Market has struggled since late 2017, however, there are signs that many of these stocks are in the process of changing long-term trend.
USD/INR is at an important inflection point that should set the tone for this pair in 2019. Here's what we're watching for clues into its next major move.
Autos were some of the worst performers in 2018, and new lows on a relative basis to start 2019 suggest the first quarter may bring more of the same for this sector. This post will outline why we want to continue to sell strength in this sector, as well as the best ways to express this theme.
Below is a chart of the Nifty Auto Index hitting new 52-week lows relative to the Nifty 500. This trend of under-performance has been intact since early 2017 and appears to be heading back toward the lows it set in 2012-2013.
This is going to be a quick post, but I noticed a chart during my analysis that was too nice not to share. It just so happens that it's a great example of how a stock should act when transitioning from a downtrend to an uptrend.
As we wrap up 2018, it's time to forget everything that happened this quarter and this year and start from scratch. It’s irrelevant. We’re moving forward with fresh eyes. This is our Q1 2019 Playbook.
Part 1 of our Q1 2019 Playbook discusses big-picture themes, while this part focuses on the individual stock setups with the best reward/risk scenarios heading into the new year.
