It’s hard not to reflect on the past 12 months as we celebrate the New Year with our friends and family. For me it’s both a blessing and a curse. While it’s exciting to begin 2018 on a fresh note, I really didn’t want 2017 to end. It’s been an amazing year of learning and growing as an investor and a business man. It’s not easy, but every challenge brings its own lessons and rewards. It’s never a loss if you can learn from the experience.
Today I wanted to share what I’m thinking about the past year and what I’m expecting as we enter 2018. I do this because I believe it’s therapeutic to put thoughts down on paper. I encourage everyone to keep some sort of journal, whether in a public forum like me or private. It’s also important to me to continue to think out loud so readers can better understand where I’m coming from. I think we always need to know who is writing and producing the content we are consuming. Whether it’s via text, audio, video or otherwise.
This is who I am:
I’m coming into 2018 with a completely open mind. This past year was amazing. In January, I hosted Chart Summit– the first ever completely virtual Technical Analysis Conference. We had over 10,000 people from 100 different countries attend this event and watch the presentations given by some of the top Technical Analysts in the world. You can still watch all of the videos for free here. I’ve never received so much incredible feedback from anything else I’ve ever done in my entire life. It’s not even close.
In February I had the opportunity to travel to Southeast Asia for 2 weeks where I gave 8 presentations in 5 different countries: Hong Kong, Taiwan, Singapore, Malaysia and Philippines. If you’ve seen my presentations in the past, you know I can rip through hundreds of charts and discuss markets all day. But for me it was the conversations that I was able to have before my events as well as afterwards over beers and cocktails at the local watering holes. Here are my new friends at Bloomberg Michael and Harry:
Everyone was so friendly and willing to learn and share ideas. Living in New York for 15 years and now in California for 2 years, I talk to traders and investors every day. What is most interesting is that no matter how different our cultures are, and in many of these cases very different, our emotions driven by fear and greed are exactly, 100% the same. I’ve always hoped it was liked that and I’ve read plenty of material that suggested it was, but until you see it and actually have those conversations I don’t think it really hits you. We are all the same. It’s unbelievable. Here I am with some of the students at Hong Kong Baptist University:
In the Spring I was able to attend the Stocktwits Cashtag Awards in New York City where I was nominated in several categories. Our friends at Investopedia gave me a mic and let me interview a lot of the most popular guests in attendance. That was a lot of fun. You can find these videos here.
The CMT Association held their annual symposium that week as well. I was also asked to interview the guests there once again. It was such an honor to be able to ask the questions I wanted to ask to some of the greatest Technicians that ever did it. What a pleasure this was for me! Here I am interviewing Louise Yamada. Another legend I got to interview was Alan Shaw, who was actually Louise Yamada’s boss a long time ago. That was incredible. You can find all of those videos here.
This Summer I launched the first ever Podcast for Technical Analysis and its practitioners. You can find it at TechnicalAnalysisRadio.com and we are now 14 episodes deep featuring many of the top Technical Analysts in the business. This has been a lot of fun. The genesis of the whole thing was two fold: first of all, I love listening to podcasts but there weren’t any dedicated to what I wanted to listen to. So I said the hell with it, I’ll do it! Also, I’m lucky that a lot of my friends are some of the best technicians out there and we argue about markets all the time, whether over the phone or over beers. These are the same conversations I’m having anyway, except now we press the record button. I think everyone wins that way.
The website has come a long way in recent years. This summer we added the Educational Tab labeled Allstarcharts EDU. In there you can find out exactly how I look at markets – where I start, where I finish and everything in between. Over the past 7 years at Allstarcharts I’ve written a lot of things down on paper. These Educational Pages are a collection of many of those that I have also added to and will continue to add content to this page over time. Make sure you keep coming back and checking it out, or be on the list to get notified of any new material. Many of you ask me questions about Moving Averages, Support and Resistance, Fibonacci and other topics. Most of your questions will be answered on these pages. Otherwise you can always contact me here.
We have a lot of different types of customers who buy the research: Individual Investors, Hedge Funds, Mutual Funds, Pensions, Family Offices and Financial Advisors. All of these customers use our services for different reasons – some for the trade ideas, others for the macro content, and many for both. Some customers have even told me they just pay for the research to know that if shit is about to hit the fan, I’ll be there letting them know that something big is about to go down. I can appreciate all of those, but one thing I noticed was how many Advisors we have in our community here at Allstarcharts. So we launched the Advisors Corner – designed to help Financial Advisors save time and also service their clients better and more efficiently. You can learn more about that here. It comes included with your membership to Allstarcharts Premium.
The past few months I’ve been working on a bunch of cool things that we’ll be announcing more details on soon. Chart Summit 2018 is going to be held on Saturday January 27th. Look for invitation to that shortly. I’m traveling to India in January to give presentations and learn from local traders and investors in Delhi and Mumbai. Please let me know if you are in the area and I will send you an invitation to the events. We are adding a section specifically for Canadian Stock Market Sectors, Indexes and individual stocks in the first quarter. We are getting bigger as a firm and as a brand. It’s been pretty amazing to watch this humble blog grow into what it is today.
With the help of my staff we are working on making this platform the best Technical Analysis Research on the planet. I am confident that we do more work and analyze more market behavior than anyone else. There is no magic indicator. I’ve learned that you just have to put in the work. Ripping through 5000 charts a week really helps. Most people can’t do that, or don’t want to do it. So I do it for you.
As we enter 2018 I want to keep a completely open mind. I don’t care what we did last year or the year before that. I don’t care what percentage the S&P500 went up since January 1st 2017 or how few times it corrected 3% or any of that nonsense. It doesn’t matter. We want to approach the market place like if it was a blank canvas.
What’s interesting is what we’re seeing in Canada and Australia and how the Materials and Natural Resource names are perking up at the same time. It seems to me like a big ongoing theme and Canada/Australia breakout and metals/materials doing well in the first quarter.
First here is Canada and Australia both breaking out of multi-year bases:
I would encourage you to go through all of the materials stocks in the S&P500 and beyond. There are a lot of interesting names setting up for major moves. Last year the big area to be in within Materials was in Chemicals. That worked out really well. At this point, I’m finding a lot more opportunities in the metals and mining space. I’m singing a very different tune here than I was throughout most of 2017.
One that I find interesting is Martin Marietta Materials. We want to be positioned for another breakout higher and over 50% of potential upside here. We only want to be long $MLM if we’re above 200 with a target above 350:
There are a lot of other names in that group that I like a lot and I go over each of them in my 2018 Stock Market Outlook. There is something really interesting happening in Materials that is being confirmed by what we’re seeing in Canada and Australia.
Also worth mentioning is the strength in the US Broker Dealers and Exchanges. This is one of the most important sector indexes on planet earth. I just don’t see an environment where stocks as an asset class are getting destroyed while the brokers and exchanges and breaking out of a 10-year base. I just don’t see it.
If the $IAI which represents the Brokers and Exchanges is back below the 2007 highs, then come talk to me about getting aggressively short. Until then, we want to be buyers of weakness in stocks, not sellers of strength.
Another one you could add to this list of assets that are breaking out to all-time highs is the London $FTSE 100. This is one of the top 5 (top 3?) most important stock market indexes in the world. The fact that we went out on the last day of the year at a new all-time high daily, weekly, monthly, quarterly, and yearly close suggests to me that we are probably not in a downtrend. If we are above those 2015 highs and FTSE is breaking out above an 17-year base, how can we not be bullish stocks? This has been my argument since 2016.
From a risk management standpoint, I have a huge list of stocks that I think are above key levels and part of the bigger picture bullish outlook. But if these start to break below their key levels, there could be more downside. I would say that if these failed breakouts start to add up, there could be more trouble involved for stocks as a whole. The following is a list I put together that doesn’t include all of them, but what I think are some of the most important ones based on market capitalization, correlation with the S&P500 and sector weighting. With each ticker symbol I added a risk level which is where I think things get hairy if we’re below it:
$JPM $102, $GS $250, $AXP $95, $TRV $129 $CSCO $37, $AAPL $162, $MSFT $83. $MCD 163, $HD 185, $CVX $119, $XOM $80, $BA $251, $CAT $145, $MMM $229, $UTX $124, $KO $44.50, $DWDP $67, $WMT 91, $JNJ $136, $CHRW, $CSX $48, $EXPD $57, $JBHT $111, $KEX $62, $LUV $64, $GOOG $995, $BAC $29.50, $WFC $58.70, $FCX $17, $HON $150, $AMD $9.40, $BABA $159, $TXN 90, $BK $53.50, $BBT $49, $FITB $30, $HBAN $14.40, $KEY 19.30, $AMTD $47.75, $CME $142, $NDAQ $72.60, $WLTW $149, $RYF $43.70, $AMZN $1080, $BBY $60, $GM $42, $DHI $49, $MAR $131, $LVS $68, $FOX $30, $NYT $17, $ROK $181, $DWDP $67.50, $BDX $214, $SYK $151
Think of this list as our key to risk management from a bottoms up approach. If we start to see a lot of these holding below the levels mentioned, it would argue that the weight of the evidence is suggesting further weakness should be expected. But, if a large majority of these hold above their levels and continue to rip higher, I think that many of the upside objectives I’ve mentioned in US indexes and sectors will be hit. It’s as simple as that. We’ll go back to this list and reevaluate in the coming weeks and months to see how many are holding and how many failed. It will most certainly help us making decisions in the future. That’s what this is about, adapting as the markets add new data to the equation. I think this list will come in handy then.
I hope you have a safe and happy New Year. This for me is a time to read, reflect, spend time with friends and family and get ready to hit it out of the park in 2018.
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Thanks for all of the amazing feedback and nice emails you have sent me all year long. It really means a lot. Here’s to the New Year! Let’s make it the best year ever!
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