As we head into year end there's a lot going on in markets, particularly on the macro and intermarket front.
With that being said, I gotta give the people what they want so today's Chart of The Week is going to focus on a trade setting up in one of 2019's most controversial stocks...Beyond Meat.
There's been lots of frustrating talk about companies with high share prices not splitting their stock. I tend to agree. While technically splitting shares of a stock doesn't do anything to enhance the value of your investment, it does help to provide greater liquidity for one to get into or out of a position quickly and at a fairer price.
But this is an argument for academics. We're just here to make money.
Perhaps you've seen JCs recently bullish post on Amazon $AMZN and you agree that you'd like to take a long position, but the high share price scares you?
How quickly people forget what a beast Amazon has been for years. All it took was an 18-month consolidation for investors to fall out of love with one of the greatest stocks in American history.
The bet the bears are making is that Amazon has been lagging and dragging down the Consumer Discretionary sector, considering it's 22% weighting in the index $XLY. So if you believe this is a big market top, I understand why you would think Discretionaries are setting up for a big fall. I totally get that.
For those new to the exercise, we take a chart of interest and remove the x/y-axes and any other labels that would help identify it. The chart can be any security in any asset class on any timeframe on an absolute or relative basis. Maybe it's a custom index or inverted, who knows!
We do all this to put aside the biases we have associated with this specific security/the market and come to a conclusion based solely on price.
You can guess what it is if you must, but the real value comes from sharing what you would do right now.Buy,Sell, or Do Nothing?
People don't like it when I tell them we're near the beginning of a new bull market in stocks. For some reason, they prefer that cozy feeling of going to bed thinking stocks are near an important high, and they've somehow outsmarted the system by selling stocks in uptrends instead of buying them.
I'm convinced some of these people must be looking at their charts upside down.
Anyway, let's take a look at the markets so I can show you why I think we're closer to the beginning of a new bull market and not near the end of an old one:
Mobile Payment stocks have been a key part of our focus on the Technology theme taking place across various sectors of the market.
Since the summer the space has cooled off a bit but is back at levels where it would make sense for the trend to reaccelerate to the upside.
Here's the Mobile Payments ETF vs S&P 500 ratio (IPAY/SPY) pulling back to trendline support. This looks like a normal pullback within a long-term uptrend, however, our concern is that momentum got oversold for the first time since mid-2016.
The strongest uptrends do not get oversold, but unfortunately, this one has so we need to watch if prices bounce from this level and resume their uptrend (preferably getting overbought once again) or if they roll over through support and make fresh lows.
Copper has been getting a lot of attention as it hits 5-month highs, but there is another Base Metal chart that's not being talked about.
Today we're looking at that chart and then taking a more comprehensive approach at what's going on in the space.
Here's Copper making 5-month highs as momentum attempts to get overbought. The record net long position held by commercial hedgers continues, suggesting they think Copper prices can still head higher despite a more than 10% rally from the July failed breakdown.
Click on chart to enlarge view.
Stronger Copper is a good thing for Emerging Markets and reflects market participants pricing in stronger economic growth conditions.
I know what you're thinking? A bearish play? In this market?
Believe it or not, there are some weak sectors out there, and there's a stock we're bearish on that may have just exhausted itself in a last-gasp dead-cat bounce which may be soon reverse and resume its downward trend.
For those new to the exercise, we take a chart of interest and remove the x/y-axes and any other labels that would help identify it. The chart can be any security in any asset class on any timeframe on an absolute or relative basis. Maybe it's a custom index or inverted, who knows!
We do all this to put aside the biases we have associated with this specific security/the market and come to a conclusion based solely on price.
You can guess what it is if you must, but the real value comes from sharing what you would do right now.Buy,Sell, or Do Nothing?