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Expert technical analysis of financial markets by JC Parets

The Short Report (01-11-2023)

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From the Desk of Steve Strazza @Sstrazza

When investing in the stock market, we always want to approach it as “a market of stocks.”

Regardless of the environment, there are always stocks showing leadership and trending higher.

We may have to look harder to identify them depending on current market conditions. But there are always stocks that are going up.

The same can be said for weak stocks. Regardless of the environment, there are always stocks that are going down, too. 

We already have multiple scans focusing on stocks making all-time highs, such as The Hall of Famers, The Minor Leaguers, and The 2 to 100 Club.

We filter these universes for stocks that are exhibiting the best momentum and relative strength characteristics. 

Clearly, we spend a lot of time identifying and writing about leading stocks every week, via multiple reports.

Now, we’re also highlighting lagging stocks on a regular basis.

[Read more…]

[Options] Putting the Offense on the Field

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With the NFL Playoffs getting underway this weekend (Go Bills!), it’s time we put the offense on the field!

I was kicking around a bullish idea in a consumer staples name during our Analyst meeting today. The chart looks great. The setup is good. We can position for a nice potential reward versus the risk we’d incur to put the trade on. Everyone agreed that its probably a good trade.

But… is it aggressive enough?

Answer: No, it’s not.

The thinking that emerged from our chat was that risk is back on in the stock market; therefore, we need to get into the most reasonably aggressive names we can. And one of the areas where risk is most definitely “on” is in the homebuilders sector.

If all we did was watch the evening news or listen to the inflation and interest rate scaremongers, we’d reasonably conclude that a long-term and painful bear market for real estate and housing in particular is a slam dunk. No contest.

If a severe real estate bear market was in the cards, would we be seeing homebuilders ripping of their recent lows the way we have over the past couple of months?

Check out this chart of Toll Brothers $TOL: [Read more…]

The Euro Has the Answer

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From the Desk of Ian Culley @IanCulley

Is the dollar going to finally bounce?

As I pointed out last week, if there was ever a place or time – it’s’ now! But that doesn’t mean it’ll happen…. 

One thing is certain: The markets don’t care what I think. This includes the US dollar.

But when I look at a chart of the EUR/USD, the largest component of the US Dollar Index $DXY, it’s running into a logical level of resistance.

How the euro reacts to current levels will set the tone for the dollar in the coming weeks and months.

[Read more…]

Industrials Continue To Lead Stocks Higher

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Historically, Industrial stocks are the ones with the highest positive correlation with the overall market, among all the S&P sectors.

Financials are obviously important. We don’t have bull markets around here without them.

Technology has also been important, considering it has the highest weighting among all the sectors in the U.S.

But when you run the numbers, it’s actually Industrials that comes out on top.

Industrials are officially the market’s most important sector.

And so when we take a look at how they’re behaving, I’m still not seeing the weakness that most investors keep telling me is coming.

In fact, look at Industrials breaking out to new multi-year highs relative to the rest of the market: [Read more…]

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