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Time To Fade The Natural Gas Rally?

January 12, 2016 by JC

From the desk of Tom Bruni @brunicharting

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Potentially Time To Fade The Natural Gas Rally

With Natural Gas futures up roughly 48% since the December lows, the urge to call a bottom in this asset class is quite strong. However, history tells us that the most vicious rallies occur during bear markets, which may suggest that current levels offer a decent risk/reward on the short side.

Before taking a look at price, it’s important to be aware of current sentiment and seasonality data within its proper historical context. In terms of sentiment, the recent rally has allowed a number of things to occur [Read more…]

Free Webinar – Investing in 2016 Using Intermarket Analysis

January 12, 2016 by JC

This year has gotten off to an awfully noisy start. When you consider that most of what we’ve seen in the first week of 2016 is just a continuation of ongoing trends, you would think that people would consider this to be normal. But since there is a change in calendar, people rather freak out and the noise levels are spiking for little reason. Trends typically continue, rather than reverse course. So why should a change in the calendar year make that any different? It doesn’t.

I want to invite all of you this Thursday January 12, 2016 to a FREE Webinar that I’m putting on where we will all remain calm, go over the biggest ongoing themes across the global marketplace, and figure out how to continue [Read more…]

U.S. Mega-Cap Stocks Break Out To Start 2016

January 11, 2016 by JC

With all the noise surrounding the recent sell-off in the U.S. stock market, it can be easy to forget that there are some areas of the market doing much better than others, and there is a lot of money to be made in the widening of those spreads. This is where intermarket analysis and ratio analysis can really become profitable for a portfolio. Today we are looking at the biggest companies in America, as a group, breaking out to new highs relative to the smallest companies in America: the Micro-caps.

What this ratio tells us, as investors, is the direction of the flow of money. Are institutional dollars flowing into the riskier, smaller companies in the stock market, or is it going into the larger, more traditional, relatively safer segment of the market that is, the Mega-caps. To me, there is no better gauge out there for the Mega-caps other than the old Dow Jones Industrial Average. The 30 components that make up this Index are 30 of the largest companies in America: Apple, Microsoft, Exxon, JNJ, General Electric, etc. When we compare this group to the Russell Micro-cap Index, we get a very clear picture of the direction of money flow.

Here is a 10 year chart [Read more…]

Non-Correlated Short Setups In Live Cattle

January 8, 2016 by JC

Ladies and gentlemen, let me introduce you to Tom Bruni @brunicharting

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Non-Correlated Short Setups In Live Cattle

With every global equity market down to start 2016 and media outlets declaring “Markets In Turmoil”, it can seem like there are no opportunities to make money in this environment. While it may be true that it’s difficult to press shorts while stocks are extended in the short-term, and even more difficult to try to make money on the long side until global markets stabilize for a few days, as market participants we can look at all liquid asset classes around the globe for opportunity.

With that being said, Live Cattle Futures are a non-correlated asset that look interesting on the short side.

From an structural perspective, Live Cattle Futures [Read more…]

20% More Downside Coming in the S&P500

January 8, 2016 by JC

We’re down 9% from the all-time highs in the S&P500 and I see people acting like 2-year olds that just had their favorite toy taken away from them. “Markets in turmoil”…..really? Why, because the market is down 9% from it’s highs last year after rallying over 220% over the prior 6 years? Please.

If you don’t live in a box and have access to any data that came before tinder was invented, you’ll easily be able to see how perfectly normal it is for markets to go both up and down. As someone who looks at stock markets all over the world, commodities and currencies, I see things get absolutely destroyed all the time. Look at the British Pound lately, look at the agricultural commodities, [Read more…]

My Favorite Chart In The World Right Now

January 7, 2016 by JC

The global markets are a never ending puzzle that we’re all trying to solve. There is never a straight answer because everything is always changing. At different points throughout the never ending evolution of markets, I have what think at the time to be the most important chart in the world, or at least one of them.

Today I believe that we really need to be watching the spread between the U.S. 10-year Treasury note yield and the U.S. Treasury 2-year yield. With 10s currently at 2.18% and 2s at 0.99%, the spread is now at 1.19. This is has been cut in half, and then some, from last year’s highs of 2.61. Us market nerds call this a flattening of the yield curve.

Here is the chart of the 10-Year U.S. Treasury Yield minus the 2-Year U.S. Treasury Yield: [Read more…]

[Chart Of The Week] Consumer Discretionary vs Consumer Staples

January 6, 2016 by JC

Ratio analysis is one of the most valuable tools that we have as market participants. It’s important to recognize where money is flowing out of, and where it is going into. This is the case when it comes to stocks, bonds, commodities and currency markets. A lot of these ratios tell us what the institutional money is doing, which is what drives markets. Think about the long-only mutual fund managers as a giant cruise ship. It takes a long time for a cruise ship to turn completely around and go in a different direction. With the amount of money being controlled by mutual fund managers, it’s a similar situation. We can spot a cruise ship turning around very easily, because it takes so long. It’s not much different in the stock market.

Today we are looking at a ratio of the Consumer Discretionary Sector vs Consumer Staples. The reason this is important is because of the high correlation between [Read more…]

“Do Nothing” Is Usually The Best Answer

January 4, 2016 by JC

Most of us in the trading and investing universe have the freedom to buy or sell anything we want, whenever we want. Sure, there are some exceptions out there like long-only mutual fund managers that have to pretty much be fully allocated at all times or certain funds out there that have to follow a specific mandate. The majority of us, however, can do anything we want, even if it’s nothing at all.

How often do you hear someone on the TV or read in an article that the guru opining on the topic is suggesting that “doing nothing”, is the best course of action. It’s either a buy or a sell [Read more…]