It's my favorite time of the month! We have a fresh batch of Monthly Candles to analyze, help us identify trends and find profitable ideas. It takes me no more than 30-60 minutes and I only have to do this exercise once each month. That's just 12 times a year and BY FAR the most valuable 6-12 hours of work I put in each year, and it's not even close!
I'd like to invite you to join be this evening for a live Strategy Session. We'll be going through all the most important Monthly Charts and talk about what we want to do as we enter the 3rd quarter!
I will be hosting this Live Call tonight, Wednesday July 1 @ 7PM ET. As always, if you cannot make the call live, the video and slides will be archived and published here along with all the other live calls since 2015.
On the other hand, cyclicals and Value were already hurting coming into the year and then endured serious structural damage during the Q1 crash. If you've been invested in these areas, particularly those groups directly impacted by Covid-19, it might just seem like the "worst of times."
In this post, we're putting aside our broader market thesis that we've outlined (June 28th, June 27th, and June 24th) and focus on a specific sector that may be presenting opportunity on a relative basis.
A few weeks ago we highlighted the Nifty Services Index, but this week we're taking a similar approach and thesis towards the broader Nifty Fast Moving Consumer Goods Index.
In early May we outlined the "Five Bull Market Barometers" we're watching to identify the beginning of a new bull market in stocks.
If you haven't read our initial post linked above, we'd encourage you to check it out so you understand what the rationale behind these five indicators is.
We take a consistent intermarket approach to stocks. Not only do we analyze all the Stock indexes, both domestically and around the globe, but we also compare stocks to other asset classes. This is historically very helpful information to determine the direction of the primary trend for stocks.
Today, we're taking a look at stocks running into major resistance relative to its alternatives. More specifically, stocks are failing relative to both Bonds and Gold.
As you can see in this chart, we saw significant support near this gray shaded area in late 2018 and then once again in August of last year. This "Support" finally gave way and broke in early March, almost 4 months ago. This former "Support" has now turned into "Resistance" throughout June:
When going over some of this week's content ideas with JC, I told him "I can't possibly write another post about Tech stocks, but I want to."
His response was simple: "That's information."
In other words, based on the thousands of US Equities charts I'm looking at each week, the strongest uptrends continue to be in Technology $XLK. The fact that it almost seems too good to be true, or that I feel like I'm beating a dead horse about "tech, tech, and more tech" - is all the more reason to remain bullish.
We can't change the fact that there's a lot of good stuff going on in the space right now. We can only interpret the data in front of us, and right now, it's saying we should keep buying Tech.
Financials are what we're watching very closely this week as a warning of a more substantial stock market correction throughout the summer.
Our strategy has been to buy stocks that are going up. That's worked well. But if you noticed, that has NOT included financials. It's been mostly in the Technology, Internet, Social Media, Biotech & Mobile Payments sectors. That has been our go-to universe during this multi-month rally in stocks.
However, even though we haven't been buying bank stocks, that doesn't mean we just ignore them. Quite the opposite, in fact. If you recall, it was the bank stocks that helped us get so bearish in early February, well before any market crash. We are focused on this group again today for the exact same reasons: Risk Management.
Here is a chart of Financials flirting with that 23 level. That represents the former highs from April. If we're below that, the risk in here is down, and not up:
Outside of India, many major indexes like the S&P 500, have yet to recover above their resistance levels we outlined two weeks ago. With that said, prices have yet to collapse either.
Instead, what we're seeing is prices digesting their gains and setting up for their next move...in whatever direction that may be.
Inside of India, we're seeing the major indices experiencing their first real day of selling after a strong run off of the June 12th lows.
In this post, we're going to provide some perspective on the question many are seemingly asking, "was that it for stocks?"
Last week, we introduced our new weekly column called "Under The Hood." You can read more about it here.
Basically, we are looking at a universe of the most popular stocks on Robinhood measured by the net increase in accounts holding them week-over-week. Then we're drilling into the charts to find opportunities to either join in and ride the momentum in these names higher, or bet against those that get too frothy.
Here is this week's list. It represents the top 60 stocks that experienced net increases in ownership among Robinhood users last week. We've also included their weekly performance.
Reliance Industries is the largest component of the Nifty 50 at nearly 12% of the index's weighting, so when it moves, we need to pay attention.
The stock has come a long way since its March lows, so we want to take a look at where it's come from and what its recent break to new all-time highs means for its future.
