If you've been in our world long enough you've heard someone say, "Technical Analysis Is Voodoo". As far as I'm concerned, the more people who think that the better it is for us! As Technicians we are analyzing the behavior of the market and its participants. Our human emotions are driven by fear and greed and therefore markets trend, by nature. This is why Technical Analysis works. Today I sit down with Sebastian, the wine maker at Rancho Maria Winery in Sonoma, CA, to discuss this very topic.
In this Episode of Allstarcharts Weekly, Steve and I talk about how important it is for Transports, Small-caps and Micro-caps to hold above their August lows. This is a major risk barometer for sure. The Dow Jones Transportation Avg held its early June lows and so did the Russell2000 Small-caps. As long as that remains the case, we believe the path of least resistance is higher for US equities. As a confirmation, we're looking for Micro-caps to get back above their early summer lows. This period reminds us a lot of what we saw in 2016 right before a historic rally in Stocks around the world!
In this Episode of Allstarcharts Weekly, Steve and I talk the relative performance of stocks. When assets are in strong uptrends, they not only perform on an absolute basis, but they tend to outperform their alternatives. With new highs in the S&P500 last month, we've seen nothing but lower highs relative to both Gold and US Treasury Bonds. In fact, on a relative basis, the S&P500 is actually down to its late December 2018 lows. Will they hold or confirm a massive distributive top? I think the resolution will tell us a lot about the strength of the current stock market.
In this Episode of Allstarcharts Weekly, Steve and I talk about US Small-caps and the underperformance we've seen out of anything non-large-cap since 2018. We are now down to levels not seen since early 2016 when Small-caps started their outperformance vs Large-caps, which is where stocks bottomed after the 2015 cyclical bear market. Is this where the turn begins? Let's walk through it together and see if we can figure it out!
In this Episode of Allstarcharts Weekly, Steve and I talk about the underperformance of European Stocks and the fact that it's their weighting in Financials that is, in part, dragging them lower. This has really become an interest rate story as Financials around the world are keeping other countries' markets from breaking out. The overwhelming exposure to Technology continues to keep the US winning relative to everyone else.
In this Episode of Allstarcharts Weekly, Steve and I talk about the recent strength in Gold, even in the face of a Dollar that has yet to start falling. After Thursday and Friday's turn around, I think it's finally time for the Dollar to weaken. The way I see it, the relative strength we've seen in Gold was a heads up that the Dollar is set to fall. The correlation between Japanese Yen and Gold Miners on a relative basis is the intermarket relationship that stands out the most.
In this Episode of Allstarcharts Weekly, Steve and I discuss the Intermarket Relationships that help identify the next direction for US Interest Rates. These assets include Regional Bank Stocks, Utilities, Real Estate Investment Trusts, Copper, Gold and TIPS among others. Which way are Rates heading next?
If you ask 100 people what Technical Analysis is, you might get 100 different answers. In this video I try to explain what Technical Analysis means to me. There are a lot of misconceptions about what it is and what it isn't. I hope I can clear some of that up in this short video!
We live in a global market environment. There are still people out there who think that stocks in the United States go up or down because of what is happening in the United States. I think in order to properly identify the trend in stocks as an asset class, we have to look all over the world. In this video we do just that!
I can't think of a better time to talk about Fibonacci Extensions. The Dow Jones Industrial Average right now is fighting to break through an important cluster of extensions that stem from the last two epic peaks we had in the market: 2000 and 2007. A breakout above 27,000 could spark a new cyclical bull market that we believe falls within the context of an ongoing structural bull market. In other words, this is a more intermediate-term breakout (years) while structurally (decades) we have already been in a bull market since arguably 2013 or even 2016.
In this video I talk about 2 key extensions: 261.8% and 423.6% which is exactly where the Dow stopped going up in early 2018. Was 17 months enough time at these levels before we can move on? Let's discuss:
One question that I get a lot comes from new investors, "Hey JC, I'm starting to get into the market for the first time, any advice?"
For me, I'm convinced you have to get kicked in the stomach, at least once, but likely even more than that, to finally understand the importance of Risk Management. But if you can somehow figure out a way to just take my word for it, and eliminate your emotionally driven decisions completely, I believe it puts you way ahead of 99% of market participants around the world.
