JC, Author at All Star Charts Page

The Risk In Owning Stocks Is Elevated

February 25, 2020 by JC

The risks associated with owning stocks are currently elevated.

There are a lot of things I can say, levels I can point out, possible outcomes I can walk you through, all those things. But the one common denominator between all of those is that the risk in owning stocks is currently higher than it normally is.

This is an important time to remember your original investment objectives, time horizon and risk parameters. Before buying a stock, or entering any investment for that matter, these 3 questions need to be answered. I can’t answer them for you. But what I can do is show you what we’re seeing from an intermediate-term horizon.

Our goals here are to make money this quarter. We care about the coming weeks and months. It doesn’t matter to us what the market does next year, and it doesn’t matter what it does today. Weeks and Months. That’s our focus.

For this time horizon, the risk of owning stocks has been elevated. I believed the weight-of-the-evidence had been leaning this way the past month, but we’re just now starting to see it affecting large-cap stocks. We’ve seen the deterioration of market breadth since mid-January. We’ve seen the flight to safety bid in Bonds. And now we’re seeing breakouts that Stocks had been attempting failing all over the place.

Here is a perfect example of what’s happening. The S&P500 had one last push through our key 3300 level until completely collapsing back below it. And this wasn’t like a small correction either. This was a weekly gap lower. How I learned it, this is a potential breakaway gap, suggesting this is just the beginning, and no where near the end, of the selling pressure: [Read more…]

All Star Interviews Season 3, Episode 17: Jeff Hirsch, Author of The Stock Trader’s Almanac

February 18, 2020 by JC

Jeff Hirsch is the Author of the Annual Stock Trader’s Almanac. He, and before that his father Yale Hirsch, has been publishing the must-read almanac every year since 1967. This year is the 53rd edition of the Almanac and a lot of the smartest traders I know keep the most recent copy on their desk. I personally have issues I’ve kept going back decades. When it comes to Seasonality, whether it’s the 1-year cycle, Presidential cycle, or even intra-month and intra-week cycles, Jeff is the person I turn to first. The month of January brings along a ton of information we can use to help us make decisions in the stock market the rest of the year. The track record is pretty spectacular, as we discuss in this episode. Today, Jeff uses these seasonal trends to help him in his role as Chief Strategist at Probabilities Fund Management. In this episode of the podcast we discuss what the down January might mean for the rest of this year, how markets tend to behave on Election Years and why Seasonal trends are so important to recognize.
[Read more…]

New All-Time Lows For Banks Relative To The Stock Market

February 16, 2020 by JC

It’s been a while since we’ve had a conversation about new all-time lows for stocks. But this week we saw the Regional Bank Index Fund close at new all-time relative lows. This is the lowest they’ve ever been.

What’s fascinating is how this is happening just as the Financials Index Fund is attempting to break out to new all-time highs, finally exceeding their 2007 peak before the financial crisis.

Here in this chart you can see the $XLF trying to finally get through those 2007 highs for the first time ever. But Regional Banks are not confirming these new highs. Neither is Momentum or Relative Strength. [Read more…]

Charts & Cocktails in New York March 9th

February 15, 2020 by JC

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!

Here Come Higher Bond Prices

February 15, 2020 by JC

Over the past month, Bonds are up a bunch as the collapse in Interest Rates has resumed. We jumped on board this bond trade last month and so far it’s working.

Meanwhile, a majority of U.S. stocks are actually down over the past month. While the S&P500, Dow Industrials and Nasdaq100 have gone on to make new highs, the NYSE Advance-Decline line (stocks only) did not, Small-caps did not, Dow Transports did not, and a majority of individual stocks did not. It’s only a minority of names doing the work, particularly large-cap stocks and some higher dividend paying areas like REITs and Utilities.

When you run the numbers, most stocks in the U.S. are down over the past month, with negative average and median returns for the Russell3000 components. It’s the bonds that are up and I think they’re just getting started.

Today’s chart focuses on the Intermarket Relationships we lean on to supplement our absolute price analysis. With rates rolling over again, are stocks and commodities confirming what the bond market is doing? In a simple answer: Yes! [Read more…]

Media Appearance: Raising Cash Now Is Prudent

February 14, 2020 by JC

As you guys know, we’ve had a much more defensive approach to the stock market over the past few weeks, especially compared to how bullish we had been for so long. There is a time to be big and aggressive and a time to be small and cash heavy. I believe we’re currently in the latter of those two categories.

Here’s the clip in full: [Read more…]

[Premium] Monthly Conference Call Video Recording February 2020

February 11, 2020 by JC

There is a lot going on in the market right now, not just in the U.S. but globally. The intermarket relationships between Bonds, Gold and the US Dollar are having a major impact on equities.

January is a month that gives us a lot more information than most other months throughout the year. We have the data now that we can use to help us identify primary trends.

Volatility is picking up. Daily swings are getting larger. I’ve seen this story before.

We discuss all of this and a lot more.

This is the video recording of the February 2020 Conference Call.

*NOTE: This Post and Video was originally intended for Premium Members of Allstarcharts Only. But due to the circumstances, we have unlocked it for everyone to watch and download the slides. We feel this can be used for educational purposes moving forward. Thank you for understanding.

[Read more…]

We’re Shorting MercadoLibre $MELI

February 10, 2020 by JC

This has already been a market environment the past few weeks where we’ve wanted to be selling Emerging Markets. But today we’re getting more specific into Latin America and shorting Mecradolibre $MELI.

Remember, like every other stock we discuss, 95% of the reasons why we’re choosing this stock has nothing to do with the chart of the stock itself. It’s the other 4,999 charts we look at every week that collectively point to buying or selling a particular security. In this case, we’re already sellers of Emerging Markets. The data suggests Latin America is one of the weaker links within EM, and $MELI just provides a clean risk vs reward to express this thesis.

Here is the chart showing Mecradolibre failing once again near this 677 level that has been trouble since last year. There is clearly still an overwhelming amount of supply here. The bet is that $MELI gets back down to 517, which would put it near the lower end of this multi-year range: [Read more…]