You guys know how much I like my intermarket analysis. It's a tool that we have as market participants that simply cannot be ignored. If you're putting together a portfolio for a client, managing your own account or just looking for major trends, comparing asset classes to one another really shows where money is flowing and where it is flowing from. It would be irresponsible of us to ignore these intermarket relationships if we're trying to make money in the market and manage risk responsibly along the way.

Today, we're taking a look at one of the most important developments across the globe. We're comparing the U.S. Stock Market and the U.S. Treasury Bond Market to one another. To keep things nice and simple we'll use the most liquid exchange traded funds that represent each market: $SPY and $TLT. As you can see here, in November last year, Stocks broke out of a 9+ year base to new all-time highs. The important thing we want to reiterate here is that the breakout has held relentlessly, consolidated for half a year, and now the path of least resistance appears to be higher:

Chemical stocks are breaking out to all-time highs. It's not just one or two of them either, they are doing this collectively as a unit. When we see broad-based participation out of a group, it's not something we want to ignore. Today I want to smooth things out and look at this group from an Equally-weighted basis. While monster stocks like Dow Chemical and Du Pont break out to new all-time highs, the question we want to ask is whether or not it's just them or are the rest of them joining along?

If you told the average market participant that momentum stocks outperformed this week and are in the process of breaking out relative to the overall market, they would say you're crazy. But for those of us who ignore the gossip columns and instead focus on price, this should come as no surprise. Sure, some of the mega-cap names have corrected a bit since last month, but they still all fall within the context of much bigger uptrends. The term "Momentum stock", on the other hand, is thrown around way too lightly, in my opinion. So rather than make up definitions for them, we'll just use the stocks that make up the MSCI USA Momentum Index (we like to use common sense here). If you compare this index to the S&P500, Momentum names are attempting to break out to new all-time highs.

I've been out of town for the past week clearing my head and taking a break from markets. This is one of the most important parts of my entire process. I explained why in this post. While I was away, I peaked at the Internets to see what the twitterati was up to while I was on vacation. Since I was in Hawaii, 6 hours removed from New York City, most of what I read was after market hours. Boy are you guys pessimistic! Do you not see that stocks are in major uptrends? And not just in the U.S. but all over the world? Do you not read anything I write? I could not have laid out the bull case an clearer before I left.

The debate that will always persist is the Stocks vs Gold question. Do we own gold? Do we own stocks? Do we own both? What percentage of our portfolio should be in precious metals? Do we own the physical or the ETF? Whether Gold is at new highs or new lows, the questions will keep coming. It's something that us as humans are driven to constantly. I've learned to embrace it. While I treat Gold and the S&P500 the same way I treat Cotton futures and the Egypt30 Stock Index, it's understandable why others don't.

So let's look at it. In which direction should we expect the next 20% - Gold or US Stocks? 

This concept of new 52-week highs can be somewhat confusing. I get it. How does it work? If we make new highs and the list of new highs doesn't confirm, do we short everything? How do we know if and when the internals of the market have confirmed or diverged from whatever the price of the index itself is doing? These days, it seems like people have more questions than answers. So today we'll take a look at what's going on and see if we can try to work through it together.

Most of you who know me already know that I incorporate a top/down, weight-of-the-evidence approach. It's not just 1 chart or 1 indicator that says to be long or short the stock market. It doesn't work that way. For me, I put in the work, weigh ALL of the evidence, and then put together a thesis. From there we then look to execute. Since March, however, a more neutral approach towards stocks has been my big theme. As we come into May, I see no evidence that suggests changing that strategy. Cash heavy still makes sense until the data changes and points to allocating that cash once again, long or short.

Today I want to go over a chart that I think the US Stock Market bulls are going to love. To me, it is potentially the most bullish chart in the entire world.

The US Stock Market has been like watching grass grow. It's a hot mess and I'm all for it. We turned Neutral towards US Stocks in March so watching both the bulls and the bears get whipped around is great theater from our cash heavy seats. Nothing I've seen in the past couple of weeks has changed my opinion on this environment. To the contrary, everything continues to suggest having huge cash positions and not trying to be too aggressive - long or short. Cash is king sometimes and neutral is a position too, don't forget that.

Many of us have the ability to invest in other markets. For the few of you who cannot, I still think it's a good learning experience and a valuable academic exercise to explore other markets. You might not be trading (or allowed to trade) foreign markets today, but I promise you that one day in the near future, buying stocks in India will be as seamless as buying Microsoft or Apple. For most of us, it already is. The world is getting smaller, not bigger.

Last week the Nasdaq100 went out at new all-time weekly closing highs. While that might seem like a bullish characteristic on the surface, I think it's important to recognize what is happening within the actual index itself. Like I always try and reiterate, this is not a "stock market", it is a market of stocks. Today we're going to take a look at what is actually going on here.

It's hard to ignore certain market moves that tend to be very rare. Bullish outside days that engulf the prior period are one of those. I think this is exactly what we saw this week in the AMEX Arline Index and it is something we want to respect. This is especially the case if you consider where this bullish reversal took place, just below important support.

Intermarket Analysis is a fantastic tool that is available to us as technicians regardless of our time horizon. Certain gauges of risk appetite, or risk aversion, can be seen simultaneously throughout various asset classes. We use these correlations as confirmations or divergences from data we're getting elsewhere. Today I want to focus on the direction of the U.S. Interest Rate Market and compare it to the data we're getting from Regional Bank Stocks and Real Estate Investment Trusts. The relationship between Banks and REITs is similar to the tug of war going on between investors in the Bond Market. 

I'm lucky in that I learned early in my career that we're in a global market place. The United States, while it is certainly important, is just one country within a massive interconnected global market. We see this more and more every day. Many choose to focus on US Stocks, and that's fine. But I think even if that's the case, approaching the market globally is not only an advantage, but becoming more of a necessity with each day that passes.

Today I want to share a chart that really tells an interesting story about what is actually happening in stocks around the world. I've taken the 10 largest exchanges in the world, including both developed and emerging markets, and equally-weighted each of them to create an All Star Charts Top 10 Global Exchanges Index. You can see embedded in the chart, the exact list of components: