Every month I host a conference call for All Star Charts Members where we discuss ongoing themes throughout the global marketplace as well as changes in trends where new positions would be most appropriate. This includes U.S. Stocks & Sectors, International Stock Indexes, Commodities, Currencies and Interest Rate Markets.
This month's Conference Call will be held on Wednesday June 15, 2016 at 7PM ET. Here are the Registration Details:
We all have the freedom and ability to focus on any part of the financial markets that we want. Some people get paid to gossip about the federal reserve and others get paid to make money in the market. We all have different objectives. If you're reading this, it's probably because you do not get paid to make noise, but instead, you get paid to make money in the market. This means you don't care what stock or ETF makes you money as long as it's making you money right? We don't avoid certain topics here because it's not sexy enough for our sponsors. I don't even have any sponsors.
So today we are taking a look at Belgium. Why? Because why not?
When you talk about the "stock market", there is so much more to it than the S&P500 or what the Dow did on a given day, week or month. These are just 2 popular indexes in the most popular country in the world. But in reality, that's all they really are. One of them, the S&P500 is cap-weighted, so the biggest companies in the world, $AAPL $FB $XOM etc, drive the direction of the index. The other, the Dow Jones Industrial Average, is made up of just 30 humongous American stocks. That's what these things are.
The actual stock market, or "market of stocks", includes many more stocks and indexes, not just in the U.S., but globally. Today I want to talk about what we're seeing out of the Financials in Europe and what the implications of the recent behavior might be.
For newer members I want to give a little bit of background on the 2016 Crude Oil Trade. Back in February our line in the sand was $29.60 based on multiple key Fibonacci extensions clustering together near that level. We wanted to be aggressively long Crude Oil along with energy stocks, emerging market country ETFs as well as the metals and mining stocks and commodities that had high correlations with that particular emerging space. With Crude Oil specifically, our tactical upside target was $38, and our longer-term target was $50. Both of these upside objectives have now been achieved.
Relative Strength is something that I take very seriously. When markets are falling, we want to look for stocks holding up the best. That is what we call relative strength and tends to lead us towards the future leaders for ensuing rallies. It's the same thing on the way up. When markets are rallying, like we saw in the past week for stocks, the ones that don't participate are showing their true colors.
One of the most valuable tools we have as technicians is the ability to go through every single stock in the Dow Jones Industrial Average and every sector and sub-sector in the S&P500 so that we can weigh all of the evidence. It might take some time, but I promise you that there is no better way to gauge the strength or weakness in a market, than by going through them all. Since most people don't have the time to do this work as regularly as I do, my annotations and notes can easily be referenced in the Chartbook.
Today I wanted to share some of my conclusions after running through all of the Dow Components and S&P Sectors on both weekly and daily timeframes. This analysis consists of over 120 charts and all of them have been updated today in the Chartbook.
The Stock Market has gone no where in 6 weeks since we originally wanted to take profits on all of the long positions we were laying out in late January and early February. During this period of no advance, we have seen a massive deterioration in market breadth with fewer stocks participating. Important sectors like Technology are breaking down hard, which is further evidence that taking profits in late March was the best course of action.
At this point, we now want to err on the short side and aggressively be positioned to take advantage of more selling to come in stocks.