This is Part 1 of the 3rd Quarter Playbook for Members of Allstarcharts.com and focuses on the U.S. Stocks Market. See Part 2 here.

From the desk of Tom Bruni @BruniCharting

One important part of the bull case for stocks in the US has been the leadership we've seen from small and mid-caps, growth areas of the market, and high beta stocks, however, we're starting to see some short-term deterioration in these leaders on an absolute and relative basis. Today I want to quickly look at the relationship between high beta stocks and their low volatility counterparts.

From the desk of Tom Bruni @BruniCharting

Last month we wrote about short opportunities in GBP/JPY and AUD/JPY that took some time to develop, but are finally starting to work. Today we're going to focus on the US Dollar as the Dollar Index is up roughly 8% since bottoming on February 15th, and even moreso against many currencies not represented in the index. While the Dollar Index may be extended a bit in the short-term, there have been several moves that look like the start of long-term trends that we want to be a part of.

From the desk of Tom Bruni @BruniCharting

Today's mystery chart reveal post highlighted the potential opportunity in the Homebuilder ETF ($XHB) as it sits at an important inflection point within a longer-term uptrend. In the post I highlighted that although there is mixed performance among the components, the reward/risk is still skewed in favor of the bulls at current levels. As a follow-on to that, this post will be highlighting some of the best and worst stocks in the sector along with our risk management levels and targets for each.

Click on chart to enlarge view.

When the biggest sector in the S&P500 representing 25% of the entire index makes an all-time daily, weekly and monthly closing high, it's probably worth paying attention. I also hear the lazy people talk about how Technology is being led by just a few names. This is simply not true as the Technology Equal-weight index is also breaking out to new highs. We're seeing a broad based rally in Tech, and it's not something new.

I've been pounding the table on Technology because it's been outperforming on an absolute basis, but also on a relative basis. Tech is not just going up, it's beating all the other sectors. Here is the Equally-weighted Tech Index Fund $RYT breaking out of a 4-month base to new all-time highs. New highs are a characteristic of uptrends, not downtrends:

From the desk of Tom Bruni @BruniCharting

Although most market participants are fixated on the gyrating US equity markets or Italian bond yields, two trade setups have formed elsewhere in the currency markets.

From the desk of Tom Bruni @BruniCharting

If you've been reading our content over these last few weeks, you've likely noticed we've been performing a lot of deep dives on the sectors we want to be involved in on the long side like Solar, Energy (premium), Retail, and Software (premium). Healthcare in general has been a laggard and the Medical Device space continues to lead, but now we're seeing Biotechnology start to break out as well. In this post we're focused on the equal-weighted Biotech ETF $XBI, as the cap-weighted $IBB is lagging significantly and remains weak. This out-performance by the equal-weight sector ETF signifies a broad-based rally is underway, so we're looking for the best names in the sector to take advantage of this theme.

From the desk of Tom Bruni

I know you're probably tired of hearing this intro over and over again, but to start this post I want to reaffirm that at Allstarcharts we remain in the camp that stocks in the U.S. and globally are headed higher. Normally we focus on the sectors that are leading and making new all-time highs, however, the Oil & Gas Exploration & Production ETF $XOP is breaking out of a multi-year consolidation, signaling a new intermediate or long-term uptrend is beginning. As a result, we want to see which names in this space present the best reward/risk scenarios to take advantage of this thesis.

Last summer I wrote a pretty controversial post about the fact that everyone just assumed retailers were all going bankrupt and buying their stocks was foolish. My argument at the time was the exact opposite: I felt that to not be buying retail stocks was irresponsible. Here is that post titled, "Is This Really The End Of Retail As We Know It?". There many stocks at the time that presented us with well defined risk with rewards exponentially greater than any risk we were taking. That worked out very well for us.

At this point, we're still hearing this short retail narrative from stock market bears digging for anything they can think of to not admit they were very wrong. You see, that's the difference between people who make money and those who don't: the ability to change your mind. Remember, we're not here to be right, we're here to make money. Check your ego at the door or this market is going to rip your face off, as it has done to many retail bears.

I am a firm believer that the Stock Market, U.S. or otherwise, is in an uptrend that began in early 2016, or summer of 2016. You can buy me beers one day and we'll discuss less relevant data points, like this 6 month difference, that dorks like me enjoy arguing about over beers. The point is, however, that this is a new bull market, not a 9-year old one like some people like to tell you.

So if we're in a bull market, then consolidations within this uptrend should resolve in the direction of the underlying trend, which is up in our opinion. The first industry group to break out from this consolidation the past couple of months and make new highs is Software. It's a major standout guys and we need to pay attention. So here's a breakdown of the sector components and which ones we want to be buying right now.