We asked whether the chart could make a decisive upside resolution out of its consolidation pattern, or if this level will continue to act as resistance and keep a cap on prices.
The responses were mixed, with many wanting to wait for more information. In many cases, people were looking for confirmation of a breakout.
The chart was a daily candlestick view of the iShares Semiconductor Index ETF $SOXX.
Not much has changed since we first posted the chart. In fact, price has yet to make a decisive move from this key level. Let's dive in and see what's happening and where it's likely headed.
We have been adamant about our view that we are in a rather messy environment. For this reason, we've been approaching markets with caution for months now.
Up until earlier this year when risk assets began consolidating in sideways patterns, it had been nothing but blue skies and new highs.
When the weather report is sunny, the water is calm, and the sky is clear, we know the weight of the evidence is with the bulls and we can focus our attention on finding the best opportunities in the strongest areas as ways to express our thesis.
But that's just not where we find ourselves today. The current forecast is cloudy with a chance of rain. And it's already been overcast for months!
And when the outlook is murky, as it is now, we want to take a step back and really weigh the evidence that's in front of us. We need to stay up on incoming data points and monitor how markets react with so many charts currently at key levels of interest.
Responses were mixed but skewed in the bearish direction.
The point of our exercise was to question whether buyers would have the power to push prices back above our risk level… or if sellers would follow-through and validate the pattern breakdown.
If the former was to be true, we’d have a “bull-hook” formation on our hands. Some might call it a “bear-trap”. Either way, it’s bullish.
But that’s not what has happened at all. Since our mystery post, sellers have taken control as prices continued to collapse lower.
We’re now looking at a decisive violation of our risk level. Let’s dive in to see what’s really going on and discuss why this chart is so important!
In last week's Mystery Post, we discussed this chartand posed the question as to whether or not it was about to finally break out above those prior highs.
With price coiling in a bullish flag-like continuation pattern, yet showing waning momentum - responses we're mixed with many wanting to wait for more information.
The chart was a long-term look at the Global Auto ETF $CARZ. And as far as the impending breakout is concerned, it looks like we got our answer this week...
Here's the same weekly bar chart. Looks a bit different now, doesn't it?
As noted in the Mystery post last week, the rounding bottom in question is a pattern we've become all too familiar with since last year.
The reason for this is simple: The chart was merely a derivative - or just another way to illustrate and visualize the overarching theme that's driving so many of our cross-asset relationships these days... The sustained rotation out of Growthand into Value.
We've written a lot about this theme since last year, and more recently have been pounding the table on a new theme that's taken the forefront for markets across the globe... We believe we're in for a trendless or rangebound period for risk assets as well as an increasingly bifurcated or mixed market.
Much of this divergence in performance among various groups can be directly attributed to this trend toward value and away from growth.
From the desk of Steve Strazza @Sstrazza and Ian Culley @IanCulley
One major theme that we’re watching closely right now are the growing number of risk assets at or near critical levels or key former highs.
We continue to see a variety of world stock market indexes approach crucial inflection points. As the list keeps getting longer, our cautionary view of the potential for further choppiness in many markets gets stronger.
Where prices resolve from here in major indexes like the MSCI Emerging Markets, EAFE -- and even some major domestic indexes such as the Russell 2000, are about to provide us with some big-time information into the health of global equities and risk-assets in general.
Today, we’re going to look at one of these diversified international indexes that finds itself in this same boat as it approaches its pre-financial crisis record highs.
From the desk of Steven Strazza @Sstrazza and Ian Culley @Ianculley
I think we can all agree that the market is an absolute hot mess right now.
The Precious Metals complex is as good an example of this as any right now.
In this post, we’ll use this shiny group of commodities as a case study to illustrate the mixed signals we see not just here but in asset classes all over the globe these days.
It’s a major development, to say the least - so we’d be irresponsible not to monitor it closely as the way things resolve from here will likely have implications that span across markets, far and wide.
From the desk of Steve Strazza @Sstrazza and Ian Culley @Ianculley
One lesson you learn pretty quickly as a market analyst is that not all assets are created equal.
Each and every financial instrument carries its own unique bundle of nuances... from a stocks' beta or systematic volatility as well as its residual risk, to the fee structure and rebalancing methodology of an exchange-traded fund or note, to the settlement and delivery procedures governing futures contracts.
All of these things impact the behavior and performance of these various markets.
Today, we're going to focus specifically on the inner workings of International Country ETFs and the way they are impacted by the currency component inherent in these vehicles.
Last week's mystery chart was a popular one, so we inverted it to make things a bit more challenging. Someone still guessed it... Nice work.
It was the iShares 7-10 Year Treasury Bond ETF $IEF. The issue with inverting Bond charts is that when you do they look identical to yields. In the case of IEF, we're basically dealing with the US 10-Year Yield $TNX.
Rising rates has been one of the main themes early this year as developed market yields have accelerated higher and hit the pockets of bond investors all over the world.
In this post, we'll check in on some of the most important and most telling credit instruments on both absolute and relative terms in order to piece together the message the bond market is sending investors.
Intermarket analysis is always an area of focus over here at All Star Charts. Right now, there are a lot of changes taking hold beneath the surface in some key cross-asset relationships.
For the longest time, the alpha has been in the US... it's been in large-caps... and it's been in growth stocks. That's been the playbook. We know because we've been running it back for years now.
Although, we're seeing strong evidence that this is no longer the case...
One of the best things about our approach is that it allows us to be incredibly flexible and adjust our views as new data becomes available.
We pride ourselves on never being dogmatic. Speaking of which, despite how much we've leaned on secular leadership from growth and tech stocks in recent years, the data is suggesting we reposition ourselves in favor of Value (read more about it, here).
From the desk of Steve Strazza @sstrazza and Louis Sykes @haumicharts
Are we finally entering the long-awaited alt-season?
We're seeing incredibly healthy rotation within the Cryptocurrency space, which we can only interpret as support for higher prices for this group of digital assets moving forward.
Here's a post in October where JC outlined that the path of least resistance was higher in BTC, and another in December where we outlined a target, which was hit in a matter of days. Our current target for the Crypto leader is 70,000.
The price action is clear: Crypto continues to benefit from a well-established uptrend.
Our main focus today is the broadening participation of many Altcoins (lingo for any Cryptocurrency not named Bitcoin).
