From the desk of Tom Bruni @BruniCharting

For most of the year we've been talking about downside in Bonds and the potential effects that would have on Equities and Commodities. With rates extending their gains to start the fourth quarter, we're going to use this post to look at the structural trends in Commodities and determine which are best positioned to benefit if we start to see money rotate.

The one thing we do know is that stocks are not in a downtrend. New all-time highs are consistent with a stock market environment where prices are rising. We saw new all-time monthly closing highs in most of the major U.S. Stock Indexes last week. The question is more about whether or not we're starting to see this trend change or deteriorate in any way. The short answer is no. We do not see enough evidence to support a bearish approach towards equities, quite the opposite in fact.

Here's what I'm seeing:

There's always a tell. Before the most recent rally we've seen in U.S. stocks since August, Aerospace & Defense stocks were breaking out. It was hard to be bearish equities with this A&D group, an important part of the Industrials sector, and a leader among leaders, coming out of an 8-month base to new all-time highs. Also, this came within the context of a tremendous uptrend, so an upside resolution was perfectly normal. That breakout was telling for stocks as an asset class. Today I think it's Technology. What this sector does here should tell us a lot about this market.

After the new weightings, Technology is going to represent 20% of the S&P500, which is still a large chunk, despite being cut from 26% of the S&P500 pre-adjustments. It's funny, strong markets do splits, not reverse splits. I'll take this as a positive for Tech. And if it's not, then I think we have a problem. That's what we're looking at here today.

We have been pounding the table to be buying U.S. stocks and ignoring the bearish rhetoric coming from almost everyone these days. I have never seen a stock market crash where people have been this prepared for it. I get an email a day warning me about this coming historic crash. We've happily taken the other side of this nonsense and continue to believe the path of least resistance is higher, much higher in fact.

However, the market doesn't care what JC thinks and is going to do whatever the heck it wants. That's life. So ahead of any serious correction, we want to identify levels where we would start to become much more neutral towards equities. Tightening stops, being less aggressive from the buy side, owning put protection and strategies like these are most appropriate under these conditions. Today, I'm going to lay out what it's going to take for us to approach the market from a more neutral to bearish perspective:

This is the monthly conference call for Premium Members of All Star Charts. In this call we will discuss the global market environment and how to profit from it. As always, this will include Stocks, Interest Rates, Commodities and Currencies. The video of the call will be archived in the members section to re-watch any time and the PDF of the charts will be made available as well.

This month’s Conference Call will be held on Wednesday September 19th at 7PM ET. Here are the details for the call:

I think the overwhelming theme here is that there are a lot more stocks I want to buy than stocks I want to sell. Why do we need to over complicate this?

Another thing I'm seeing is the January highs as a reference point. The question is whether or not the market will be able to surpass that former resistance, proving there is more demand than supply there, or if it's the other way around? Are there, in fact, more sellers up here than buyers? We can see this key January pivot point in most of the major indexes: S&P500, Dow Jones Industrial Average, Dow Jones Transportation Average and Russell3000. Can we get through those highs like the Small-caps, Mid-caps and Nasdaq already have?

I believe the answer is in the components. How are individual stocks reacting to those former highs? Are they breaking through resistance or running into sellers and rolling over?

From the desk of Tom Bruni @BruniCharting

Two weeks ago I wrote about the Canada's Energy markets, but today I want to do a deep dive into the US Energy Markets. In line with our top-down approach, we'll start with Commodities in general, get into Crude Oil and some inter-market relationships, individual sector ETFs, and finally equities with the best reward/risk scenarios.

This is easily the most valuable exercise I do each month. It takes me half an hour, just 12 times a year. It's the best 6 hours I'll spend in 2018. It helps eliminate the noise by forcing us to only look once a month. It brings us home, to the primary trend. It's easy to get lost in the daily rhetoric. This part of the process helps us completely ignore that garbage and focus on what matters.

Here's what we got this month:

We'll start with the Dow Jones Industrial Average as it tries to make a move above 27,000. There's been trouble just below that from the extension target of the 2007-2009 decline. This retest of former highs comes at a time where the Dow Jones Transportation Average is already in the process of clearing. First, here's is the Industrial Average:

From the desk of Tom Bruni @BruniCharting

Two months ago we highlighted Deutsche Bank because we felt that price action disagreed with prevailing bearish sentiment around the stock, which created an opportunity for us on the long side. Today we're looking at a stock that presents a similar trade for us, with well-defined risk and 30% of potential upside over the intermediate-term.