Despite our cautious outlook for Equities, there’s one stock setting up for a potential short squeeze…and the skewed reward/risk has gotten our attention.
Let’s take a look.
Breadth Concerns Weigh On India’s Equity Market
We’ve been outlining our thesis for weakness in Indian Equities for over a month now, but that was a tactical call within the context of bullish longer-term picture.
Unfortunately, with the last week or two of action, we’ve seen an expansion of stocks participating to the downside which suggests this near-term weakness could continue for the rest of the fourth quarter. Rather than the weakest stocks catching up to the leaders, the leaders are now catching down to the weakest names.
Let’s take a look.
Mystery Chart (02-18-2020)
From the desk of Steve Strazza @Sstrazza
New Mystery Chart!
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?
Are Autos Ready To Accelerate To The Downside?
We’ve been outlining our thesis for a choppy environment in stocks both in India and globally for several weeks now and evidence continues to build that the market agrees with us.
With weakness in the broader market, sectors and individual stocks that have not participated remain at risk to lead to the downside.
Today we’re looking at the Auto sector, which looks vulnerable to a swift 10% move to the downside if support at its multi-month lows breaks.
[Read more…]
[Premium India] Monthly Conference Call Video Recording February 2020
This is the recording from the live February 2020 Conference Call for Members of the Allstarcharts India! Before getting into individual stock ideas in India, we’re going to first start with the global macro perspective. Once we identify the direction of the underlying trends from a structural and broader view, then we’ll dive into the NIFTY Indexes on both longer-term and short-term timeframe. We want to look at Large-caps, Small-caps and everything in between before getting into the Sector and Industries themselves like Energy, Banks and Pharma.
This is when we finally break things down to the individual stock scenario with identified risk vs reward opportunities. That is what this is all about – aligning ourselves in the direction of the underlying trend while at the same time identifying where the risk is to make sure the potential reward is skewed exponentially in our favor. You will find that throughout this process we discuss Momentum, Fibonacci and Relative Strength. I encourage you to check out the Education Section so you know exactly where I’m coming from when you hear me mention these tools.
Here is the video in full:
Charts & Cocktails in New York March 9th
What are you doing on Monday March 9th? Come hang out with us and let’s talk markets! It’s free.
At 2:15 I’ll be hosting a workshop where I’ll walk you through exactly what we’re seeing in the market and what we’re doing about it. I only get 45 minutes, but that should be enough time for me to get through about 100 charts of stocks, indexes in the U.S. and around the world, interest rates, commodities like gold, oil and wheat, currencies for developed and emerging markets and, of course, the intermarket relationships between them all.
Using a top/down approach, we’ll look for stocks to buy and sell using all of the information we have.
Then at 4:15 the same day, I’ll be joined by my esteemed colleague Phil Pearlman for a discussion about markets and human behavior.
As soon as we’re done, we’ll head over to one of the local pubs.
I hope you can make it!
Ping me and let me know if you’re coming!
JC
Buyers Defend Support in Aerospace & Defense
From the desk of Steve Strazza @Sstrazza
Thank you to everyone who responded to this week’s mystery chart.
There was a nice diversity of responses. Many said they were anticipating a break of the support line and would get short against that level while others were buyers as long as prices held above it. But the majority took a neutral approach, preferring to wait for the current range to resolve before having a directional bias.
A sound argument could be made for any of these answers in my opinion, so with that as our backdrop let’s take a look at this week’s chart.
Pumping The Brakes In These Gas Names (For Now)
We’ve been highlighting the relative strength of certain Gas names in the Energy space since August, and they’ve worked wonders on the long side.
Although we’ve issued several tactical updates since then (December and January), I wanted to use today as an opportunity to revisit this thesis and update our approach given many of our price objectives have been hit.
[Read more…]
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