The thing about the market is that there is no holy grail. No matter how hard you try, you're not going to find it. The holy grail does not exist. We have to weigh the evidence knowing full well that we're working with incomplete information. The idea is to accumulate all of the data and make a conclusion based on all of it, not just some of it.
Today, I want to go over a few of the divergences that have put the bulls in a precarious situation. There is a large crowd of permabull "passive" investors that are taught just to buy stocks and hope for the best. They are shown all of these sexy equity curves and told again and again how much they would have made had they invested in the S&P500 in 1950 or 1982 or whatever cherry-picked date is forced upon them.
This weekend we updated our chartbooks for Premium Members of Allstarcharts India, so I wanted to do a quick post outlining the changes to our universe of stocks since the end of the first quarter.
This weekend I was down in beautiful San Diego for the 3rd annual Trade Ideas Conference. For me, it's not just about the presentation that I give or the panel that I sit on, but the people that I get to meet or see again. That's the great part about our community: everyone's ability to share and learn and recognize that we're all in this together. As we approach the market with our own individual goals and objectives in mind, along the way we pick things up from others that help us adjust and fine tune our strategies regularly over time. My friends at Trade Ideas put on a good show, but it was the engaged audience and interactions with my fellow speakers that really made the weekend great.
Here is the video of my presentation. Shoot us an email to info@allstarcharts.com if you're interested in receiving the slides:
Frank Cappelleri is one of my favorite guys to listen to. He brings a unique perspective because of a lot of his experience on Wall Street. Early in his career he spent time working at Smith Barney with legends Alan Shaw and Louise Yamada. He then experienced his first bear market after March 2000 working with former Lehman trader John Schlitz. Frank has been at Instinet, which is owned by Nomura, for a long time and is constantly in touch with some of the smartest guys in the business. I think he's as good a technician as anyone and in this episode he shows us just that. We discuss the market implications of a rising US Dollar and why he no longer has a target above 3050 for the S&P500. I was really looking forward to this conversation and we're lucky we get to pick his brain for a bit. I hope you enjoy this one!
We have not been in an environment where this was on the table for a long time. For those of you who know me, I think I've proven that I'm not one of these end of the world guys. We can probably all agree that I call it like I see it and have no directional bias. I walk around daily proud to not care whether the market doubles or gets cut in half. We just want to be on the right side of the trend.
The risk for most of the month has been skewed in favor of the bears. As breadth has gotten worse and momentum has confirmed downside pressure, I believe there is unlimited risk in the market right now. Nothing is out of the question.
For our subscribers I've discussed what we need to be seeing in terms of market breadth before stepping in and trading stocks in India on the long side (here, here, here, and here) and today's action suggests we may be on our way to getting that opportunity in the next week or two.
Unless you've been on an African safari during the entire month of October, you've probably noticed the dramatic shift in market tone. What has been working for the majority of the year has stopped working. The low-volatility, bullish setups playbook has been rendered ineffective in just a couple short weeks. As many of us were recently reminded, and many of you might be learning now for the first time, when market regimes change -- the process is usually swift, messy, and confusing.
If you're a long-only swing trader in this market environment, good luck. You're probably in for a wild ride.
Chicago is one of my favorite cities in the country. November 7-9th I'll be out there with the team meeting with clients and giving presentations. You're invited to join us Thursday Nov 8th at the Chicago Board of Trade for a Free event hosted by the CMT Association.
Marijuana stocks have never been that HIGH on our list of areas to look at given their smaller market-cap, average trading volume, and short price history often inhibits larger players from participating in them, however, the strong performance as of late has drum up interest in the space and increased the number of stocks that meet our criteria to analyze them. This post will be a quick update on what we're seeing from a price perspective.
This past weekend was the 5th annual Traders4ACause Conference in Las Vegas. It was a lot of fun and a bunch of us helped raise money for a list of great causes. On Saturday I gave a presentation about what I'm currently seeing in the markets, including Stocks, Bonds and Currencies. Sunday I sat on a panel with Joe Fahmy and Paul Singh and we just chatted about the markets, what we're seeing out there and shared some stories about the things we've learned over the years. We recorded the conversation so here it is in full. I encourage everyone to check out the Traders4ACause site and donate even if you could not attend. I hope you enjoy our discussion!
This past weekend we wrote updates for our US and India subscribers, discussing stock market breadth around the globe. When I do these types of updates, we often get asked why we look at international markets both in their local currency terms AND as US-listed ETFs. Why not one or the other? In this quick post we'll walk through our thought process behind it.
We've written a lot of content on the blog about the current market environment over the last few weeks, but we want to use this post to quickly point to two broad-based breadth measures we're watching to identify when a tradeable bottom might be in.