After drastic underperformance since March, one chart suggests that Gold could be setting up to outperform large-cap Indian stocks in the coming weeks and months.

Last week we suggested that the major indices could be due for a pause after a massive run in November.

So far we've seen the large-cap indices churn sideways, but the mid and small-cap indices pushed to new recovery highs.

Today those mixed signals continue. Not just in India, but around the globe.

Let's take a look at what we're seeing and how we're approaching it.

In today's chart, we're looking at the strongest sector of the market testing a key level.

Let's get into it.

In an environment where volatility has picked up at the index level and there are more mixed signals in the market, we want to be more selective in the longs and shorts we put on.

An important part of tightening up our risk management across the board is knowing what timeframe is relevant to us, both at the portfolio and individual stock level.

Today we want to look at an example in Jubilant Foodworks to highlight this concept.

In public markets, we have the ability to wait for our pitch. There are always new opportunities popping up, so if we miss one, we know there are plenty more on their way.

That's why one of the most important concepts we discuss in our work is the need for patience and knowing what we're going to do before it happens. By having a plan in place we can execute our plan once the conditions we've been patiently waiting for come to fruition.

A great example of this has been Crude Oil over the last few months.

It's been a monster run since March for equities, especially in the United States. Rotation, breadth expansion, momentum thrusts, all the works.

So what's going to stop this train? The opposite of those things, most likely.

I think the bear case starts with small-caps. I was taught to dance with the girl who brought me to the dance. Small-caps were one of the key reasons why we got so bearish in early October 2018 and then again this year in early February 2020.

So why ignore them now? I say stick with that.

As we discussed last night on our Monthly Charts Strategy Session (Premium), if you're going to be shorting stocks and betting on the end, I think both Small-caps and Micro-caps need to be below their June highs:

From the desk of Tom Bruni @BruniCharting

A weak US Dollar has been a big theme of ours since it broke down a few months ago...and this week it's back in focus.

Let's take a look at the chart and discuss why it needs to be on your radar in the days/weeks ahead.

Everything in life is relative. In markets, it works the same way.

"How could someone possibly want to own these bonds that pay negative yields"?

Well, what's the alternative? Crashing stocks? Collapsing energy commodities? It's all relative.

In my experience, when assets are in strong uptrends, some might call those "bull markets", they don't just do well on an absolute basis, but they also tend to outperform their alternatives. In the case of stocks, you have Bonds and Gold that are two other very popular places to allocate capital.

The Chart of the Week has to be the Nasdaq 100 breaking out of a multi-year base relative to US Treasury Bonds (Blue Line). I also included the Nasdaq relative to Gold, which has yet to complete this basing period (Black Line):

The stocks in the Dow Jones Transportation Average are getting the bid that they needed for this overall market to continue its march higher. Going back and doing the work, it's hard for stocks as a group to keep ripping without rotation into some of the underperforming areas. Transports were right near the top of our underperformer list for a long time.

This is no longer the case. We've already talked about how Transports were the best performermers in the world for the month of July. This weekend we also pointed to the change in trend relative to the S&P500.

Today, let's look deeper into the components of the Dow Jones Transportation Average. Remember there are 20 of them and consist of Airlines, Rails, Trucks, Logistics etc. This chart plots the drawdown from 52week highs on the x-axis and the y-axis represents the performance since June 5th, which was the former highest weekly close for the index:

Click on Chart to Zoom in

We've been selectively participating in a few Steel stocks over the last few months as we waited for a signal to get more aggressive in the space.

Yesterday we got that signal as the Nifty Metal Index broke out to new recovery highs and reclaimed support on a relative basis.

In this post, we're going to outline what we're seeing in the sector and what we're buying to take advantage of this theme.

First, let's start with Base Metals (read for context), which continue to trend higher along with Precious Metals. In July when we were talking about them, we were staying very selective in the Nifty Metal space because it hadn't yet broken out despite the strength in Commodities.

One of our favorite ways of looking at a sector or industry group is by using equally-weighted charts.

A lot of "Home TV" stocks have been on the move, so we're going to take a look at what's happening and determine what's next for the group.

First, let's take a look at our equally-weighted custom index of Den Networks, Hathway Cable, Sun TV Network, TV18Broadcast, and Zee Entertainment. Prices did break down to new all-time lows during the March decline, but quickly reversed and took out the downtrend line from their 2018 highs. Now, prices are testing former support/resistance with momentum diverging negatively, suggesting a near-term pause is likely.

Click on chart to enlarge view.