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?
Check out this week’s Momentum Report, our weekly summation of all the major indexes at a Macro, International, Sector, and Industry Group level.
By analyzing the short-term data in these reports, we get a more tactical view of the current state of markets. This information then helps us put near-term developments into the context of the big picture and provides insights regarding the structural trends at play.
Let’s jump right into it with some of the major takeaways from this week’s report:
* ASC Plus Members can access the Momentum Report by clicking the link at the bottom of this post.
We held our June Monthly Strategy Session this past Thursday night. Premium Members can access and rewatch it here.
Non-members can get a quick recap of the call simply by reading this post each month.
By focusing on long-term, monthly charts the idea is to take a step back and put things into the context of their structural trends. This is easily one of our most valuable exercises as it forces us to put aside the day-to-day noise and simply examine markets from a "big-picture" point of view.
With that as our backdrop, let's dive right in and discuss three of the most important charts and/or themes from this month's call.
For me, it's not just about one indicator or one chart.
It's a weight of the evidence game.
Since March, the bet has been Messy For Longer. We've expected a choppy environment. That's what the weight-of-the-evidence and history suggested.
But now what? Are these consolidations going to resolve lower? Or Higher? Or just stay messy for even longer?
That's what makes this all so great. I don't know. And neither do you. No one does.
It's a beautiful thing.
So as I weigh the evidence to decide rollover or breakout, I come to a series of divergences that put this stock market in quite the predicament.
With S&Ps and major indexes hovering near all-time highs, we're just not seeing it from the components themselves. Here's the Russell3000, for instance, seeing fewer and fewer new highs:
With the Dow Jones Transportation Average hitting our upside targets last month, it's become a wait and see game.
Are consolidations resolving higher, like they were before? Or are they resolving lower?
Based on the overwhelming amount of evidence, the bet we want to make as that Transports resolve lower, and join some of the other areas that have already been under pressure for months, like Tech and Small-caps.
When going through the components of this index, there were 6 names in particular that presented the best risk vs reward opportunities on the short side.
The first one Southwest Airlines. This looks like a top to me. How I learned it was to buy the smiley faces and sell the frowny faces.
Over the past few days, we've seen the market resolve higher. With the new all-time high in place, we're seeing one sector witness growing strength.
Energy has been a part of the sectors that have been showing strength for some time now. However, there are a few stocks that are now joining the bandwagon of the 'breakout express' and this seems like a good time to jump aboard!
To start off, let's take a look at the Energy index and see what we've got there. Nifty Energy has clocked a new all-time on the Monthly timeframe. Needless to say, that is a big positive! So what are the levels that we're watching? Well, from a slightly longer-term view (we're looking at monthly charts, remember?), if Energy continues to chug on higher, we're looking at a target close to 23,825.
We debuted a new scan recently which goes by the name- All Star Momentum.
All Star Momentum is a brand new scan that pinpoints the very best stocks in the market. This time around, we have incorporated our stock universe of Nifty 500 as the base. Among the 500 stocks that we follow, this scan will pump out names that are most likely to generate great returns.
While we go through our lists of sectors and stocks on a weekly basis, we thought of launching a product that would highlight the names that are the strongest performers in our universe and those that are primed for an explosive move.
Just like The Outperformers scan, this is a list of stocks belonging to the sectors that display relative strength in the market at any given point in time. Since sector rotation is the lifeblood of a bull market, we will be ahead of the curve before the gears keep shifting.
We put out a post recently about the breadth indicators picking up bullish signals. This was when Nifty 50 was attempting to move past its earlier high of 15,431.
Well, what do we have now? In addition to keeping track of the participation in the general market scenario, it is increasingly important to track the same indicators when new highs are claimed.
Nifty 50 managed to move past its resistance, but what do the breadth indicators say?
What we do here is analyze the most popular stocks during the week and find opportunities to either join in and ride these momentum names higher, or fade the crowd and bet against them.
We use a variety of sources to generate the list of most popular names. There are so many new data sources available that all we need to do is organize and curate them in a way that shows us exactly what we want: A list of stocks that are seeing an unusual increase in investor interest.
Check out this week’s Momentum Report, our weekly summation of all the major indexes at a Macro, International, Sector, and Industry Group level.
By analyzing the short-term data in these reports, we get a more tactical view of the current state of markets. This information then helps us put near-term developments into the context of the big picture and provides insights regarding the structural trends at play.
Let’s jump right into it with some of the major takeaways from this week’s report:
* ASC Plus Members can access the Momentum Report by clicking the link at the bottom of this post.
