I could not be more thrilled that it's the end of the month for one reason alone: Monthly Candlestick Charts. They get me every time! It's easy to get lost in the every day noise surrounding the market. The chart review I do heading into the first of every month is one of the most important parts of my process. It brings me home. There's no better way I know to maintain composure and recognize trends than this monthly music and chart session!
Since June of 2017 when the S&P500 broke out above 2400, we've had a target of 3000. After close to a 4% rally in the S&P500 Index this month, we went out just 6 points from a new all-time high monthly close. This is not any evidence we think suggests anything has changed. To the contrary, higher prices are things we expect to see in an uptrend:
The original inspiration for the monthly conference calls for members of All Star Charts came from the benefits of the Question & Answer sessions. We have really smart and experienced members and I think everyone can get value from this process, myself included.
Over the years, our conference calls have gotten much more in depth and to keep the videos under an hour, we simply have not had as much time for Q&A as was originally intended. Therefore, starting this month I will be hosting a video Q&A which will be archived for everyone to watch.
If you have any questions, you can fill out this form and I will be answering them in a video on the evening of August 1, 2018.
Please note that this form is not a pop-out window or link, just enter your name and question directly below in the spaces provided.
This post is part two of the semiconductor discussion that began here, with us outlining the current trend in Semiconductors from the top-down. If you've not read that yet, I suggest you do as this post will focus on the specific stocks we want to be involved in to capitalize on the eventual continuation of this sector's uptrend.
This week I was in New York meeting with partners and old friends. On Tuesday I was down at the Bloomberg Headquarters chatting with Catherine Murray about what we're seeing from a technical perspective. We discuss Technology, Medical Equipment stocks and where we are within this secular bull market. Here's the video of the interview:
Throughout April and May we've discussed market breadth improvements that have us bullish on equity prices both in the US and globally. Today I want to perform a simple exercise to see how the data we're looking at has developed over the last two months or so of trading.
One important part of the bull case for stocks in the US has been the leadership we've seen from small and mid-caps, growth areas of the market, and high beta stocks, however, we're starting to see some short-term deterioration in these leaders on an absolute and relative basis. Today I want to quickly look at the relationship between high beta stocks and their low volatility counterparts.
Last month we wrote about short opportunities in GBP/JPY and AUD/JPY that took some time to develop, but are finally starting to work. Today we're going to focus on the US Dollar as the Dollar Index is up roughly 8% since bottoming on February 15th, and even moreso against many currencies not represented in the index. While the Dollar Index may be extended a bit in the short-term, there have been several moves that look like the start of long-term trends that we want to be a part of.
Today's mystery chart reveal post highlighted the potential opportunity in the Homebuilder ETF ($XHB) as it sits at an important inflection point within a longer-term uptrend. In the post I highlighted that although there is mixed performance among the components, the reward/risk is still skewed in favor of the bulls at current levels. As a follow-on to that, this post will be highlighting some of the best and worst stocks in the sector along with our risk management levels and targets for each.