With the deterioration in market breadth throughout the entire month of April and bearish momentum divergences showing up in some of the most important stocks, sectors and countries in the world, I think some exposure on the short side here is warranted.
Today we're going over my favorite short of all the Dow 30 Components.
Every month I host a conference call for All Star Charts Members where we discuss ongoing themes throughout the global marketplace as well as changes in trends where new positions would be most appropriate. This includes U.S. Stocks & Sectors, International Stock Indexes, Commodities, Currencies and Interest Rate Markets.
This month's Conference Call will be held on Wednesday April 13, 2016 at 7PM ET.
In this month's premium members conference call, we will discuss the following topics:
- How Low Can U.S. Stocks Go From Up Here??
- A Few Non-correlated Trades to Add To Your Portfolio
- What Is The Best Trade In Precious Metals Today?
- How Do We Trade Crude Oil Now?
- What Does The Behavior of Financials Say About Risk-Appetite
- Ags Can Be A Monster, But How High Can They Go?
As always, we'll leave as much time for Q&A as possible.
It's been a while since I laid out a bunch of short ideas. As you guys know, I've been really bullish since late January. But hey, upside targets get hit, sentiment shifts, and things eventually change. Here are a list of Dow Components that I think are good shorting opportunities today:
We've been pretty neutral the majority of the U.S. Stock Market indexes over the past couple of weeks since they first starting hitting our upside targets. Some of them, like the Nasdaq100 and Mid-cap400 had yet to reach out upside objectives, but we are approaching those now. I will argue, though, that the developments we've seen are constructive, both in price behavior and in the breadth itself.
Here is what I think we need to keep in mind with each of the major Indexes. We're using only bar charts today in order to put extra emphasis on price for this particular exercise:
Over the past few days I've received a number of requests from members asking me to post a the updated charts on my favorite U.S .Stock Market short right now. In last week's letter I mentioned how Utilities were not a place we wanted to be long and there were a few ways to take advantage of the individual components of the sector.
Today I want to dive into those individual charts:
U.S. Treasury Bonds have treated us very well this year. Coming into January we wanted to buy a breakout above $122-123 in the U.S. Treasury Bond ETF $TLT with a target above $133. This upside target was achieved last month as interest rates simultaneously hit our downside target, 1.65% in the 10-year yield. Since then, we've wanted to back off and let new data dictate our next move. Over the past month, we've seen rates bounce back up towards 2.0% and the $TLT has fallen back down towards $128.
The question now becomes: Do we get back in on the long side? Or is there more consolidation or price correction needed first?
