The U.S. Stock market and most of its sectors continue to rally. As happy as we are to see this, and as much as we expect this to continue through February, these are only counter-trend rallies within larger structural declines. The good news is that counter-trend rallies in bear markets historically tend to be the most powerful kind of rallies. I think there is still room to the upside in many different sectors with very well-defined risk.
We held a free webinar this week to show off our new ChartBook and discuss how to best invest for 2016 using intermarket analysis. At All Star Charts, we use a global top/down approach in order to take the weight-of-the-evidence in Stocks, Commodities, Currencies and Interest Rates to come up with a theme. Once we have a major global theme, we will break it down to specific U.S. Sectors or Country ETFs and either buy or short individual ETFs or stocks to express our theme using strict risk management procedures [Read more…]
We have a lot going on these days here at All Star Charts, but I wanted to put together a conference call to get us all in one room and discuss what I think are currently the Best 10 Charts in the World. Most of them come along with a few more charts or data points to either help tell the story better or help with tactical risk management procedures.
Going forward only Members of All Star Charts will have access to these monthly conference calls as well as the intra-month conference calls whenever market volatility dictates.
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Tags: $SPX $SPY $EEM $XLF $QQQ $COMPQ $AAPL $XBI $WMT $IBB $GLD $SLV $UNG $USO $TLT $TNX $NIB
We have to trade and invest in the market that we have in front of us, not the one that we want. Therefore we have to be able to approach the market from a completely unbiased perspective. We don’t care if the market doubles in price or if it gets cut in half. We want to try to take advantage of moves in both directions. This is America after all.
I know it’s not sexy, but since October 23rd, we have wanted to approach the major U.S. stock market averages from a more neutral perspective. This is the day that both the S&P500 and the Dow Jones Industrial Average first got above what was then, and still is, a flat 200 day simple moving average. Securities in that sort of environment create headaches, for both the bulls and the bears. The reason is because [Read more…]
This is a common theme across U.S. equities that I have been pounding the table on since last month. There is nothing more clear out there as far as I’m concerned. The S&P500 had been consolidating in a sideways range for most of this year before resolving to the downside. This creates a big problem. All of those people that never sold now become future supply. This is the “just please get me back to even” crowd. On any strength back towards that former support, that supply of stock is sitting there just waiting to be sold to you.
Healthcare was one of our favorite shorts back in August as we were breaking support. This confirmed a bearish momentum divergence and failed breakout, compounding the problems in Healthcare (See: Is Healthcare Due For A Collapse?). Our initial downside targets were hit pretty quickly, but now going forward, all of that former support becomes overhead supply. We are currently seeing this:
All of these broken support levels in $XLV now become overhead supply. It is very difficult for the market to just rip through that until all of that supply is absorbed. At the very least, it will take time to recover from the damage that has been done. Worst case, prices head a lot lower. Either way, this is not a market where we want to be buying dips. It’s a market where we want to be fading strength. Notice the common theme? (See: Seller of Strength, Not A Buyer Of Dips)
Within this space, we’re seeing the exact same thing in Biotechs. In July, the $XBI hit our ultimate upside target which was based on a combination of the 261.8% Fibonacci extension of the 2014 correction and 161.8% Fibonacci extension of the correction earlier this year. Long time readers know that it’s when these Fibonacci levels cluster together like this that I pay attention the most:
Going forward all of that support from earlier in the summer that broke down last month becomes overhead supply. We’ve seen this support turn into resistance nicely over the past week. This $81 level (post split-adjustment) was resistance in March and early June which turned into support in July before its last leg higher. There is a lot of market memory here, meaning a large number of shares changed hands at this price. This is where the “please just get me back to even” crowd is waiting to sell to you:
This theme of overhead supply can be seen in most sectors across the marketplace and especially in the indexes themselves. The remedy here is time. Time is the best case scenario where prices don’t go much lower, build a base, and then get back above this $81 area for Biotechs and $74 for Healthcare. I’m not betting on this happening any time soon which is why for now I would prefer to sell into strength rather than looking to buy weakness.
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Tags: $XLV $XBI $SPY
Monday afternoon I was fortunate enough to be on Fox Business with Liz Claman along with my buddy Joe Fahmy from Zor Capital. I couldn’t be happier to be debating markets with someone who actually puts risk on and allocates capital to try and take advantage of a given thesis. Joe is someone whose work I respect very much so it’s nice to see we are on the same side of the trade. Both of us see higher prices in US Stocks for different reasons and we each put out different ways to express this bullish thesis.
Here is the video in full:
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Tags: $SPY $MDY $DJIA $IWM $RUT $SPX $TRAN $IYR $XLV $FDN $TWTR $GOOG $XBI $IBB $EBAY $NFLX
Earlier today I was down at the NYSE chatting with Jessica Menton from International Business Times. I sound like a broken record these days. I still like bonds, I still like commodities and the sector rotation continues to suggest that a more neutral or bearish stance is most appropriate right now for the US Stock Market.
Here’s the video in full:
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Tags: $SPY $QQQ $XLY $XLK $XLF $KRE $XLK $XOM $CVX $SLB $HAL $PSX $TLT $CCI $TNX $TYX $ZB_F $ZN_F $XBI
I had a nice little chat with the Benzinga guys this morning. We talked about Emerging Markets, Treasury Bonds, Euro, Canadian Dollars, Blackberry, Tesla, Apple, Regional Banks, Gold and Silver.
Here is an article they wrote about this morning’s conversation: Benzinga – Allstarcharts’ JC Parets
And here is the full audio recording:
Tags: $GC_F $GLD $SI_F $SLV $BBRY $TSLA $AAPL $FXE $EURUSD $TNX $TLT $EEM $RSX $NQ $FXC $USDCAD $KRE $ZC_F $CORN $TWTR $XBI