When stocks as an asset class are in a strong uptrend, or "bull market" as some like to call it, they don't just perform well on an absolute basis, but they also tend to outperform their alternatives. Two perfectly good alternatives to owning stocks are Bonds and Precious Metals.
As you can see in this chart, in early March the S&P500 broke key support relative to both US Treasury Bonds and Gold. All of that former support since 2018 "should" turn into resistance, based on our polarity principles.
In early May we outlined the "Five Bull Market Barometers" we're watching to identify the beginning of a new bull market in stocks.
If you haven't read our initial post linked above, we'd encourage you to check it out so you understand what the rationale behind these five indicators is.
Thanks to everyone who participated in this week's Mystery Chart.
Some of you were sellers of this failed breakout, while others were anticipating a move back to new highs after this brief correction, but staying patient and waiting for confirmation first before entering.
It was a mixed bag overall, so let's get into what it was and what our interpretation is.
From the desks of Steve Strazza @Sstrazza and Tom Bruni @BruniCharting
In this post, we're going to share 10 of the most important charts we're looking at right now. Some are merely for observational purposes or to highlight some of the broader trends at play in the markets while others are trade ideas in some of our favorite names and areas.
Do you know when stocks making new 52-week relative lows is actually bullish? When we're talking about Consumer Staples.
You see, when the market is falling apart, you're going to see a sympathy bid, specifically on a relative basis, into Consumer Staples. In other words, no matter how bad things get, we're still going to drink beers, smoke cigarettes, brush our teeth and wash our dishes. Those things won't change. We call them Staples.
On the flip side, when stocks are doing well and the major indexes are in uptrends, or bull markets if you want to call them that, Staples are going to underperform. Their safer-haven status and lower beta components tend to lag during the good times.
US Stocks remain the strongest game in town, with the Nasdaq 100 closing pennies from all-time highs today.
On the back of that, I wrote a post for US Subscribers outlining what the "safe haven" assets of Yen, Treasury Bonds, and Gold are doing and what it means for stocks as an asset class.
Given that US market action tends to set the tone for the rest of the world, I think it's a good read for Indian market participants as well.
Why does Technical Analysis work? Because markets trend. No one can argue that. I don't care who you are. And what do we do as technicians? We look for trends!
I was recently a guest on the Trends With Benefits show. It's the perfect name for a podcast about the stock market, especially when you invite someone like myself, who is constantly looking to benefit from underlying trends in the market.
JC summed up our present view on US Equities perfectly during this week's Conference Call:
"There are stocks we want to buy, and there are stocks we want to sell," he told Premium Members on Monday night.
Some areas, particularly the secular leaders coming into the selloff, continue to trend aggressively higher while others refuse to participate in any meaningful upside.
A great example of this is illustrated by contrasting the chart of the Dow Jones Transports (DJT) to what we consider the "New Dow Theory" Average, the PHLX Semiconductor Index (SOX).
