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Expert technical analysis of financial markets by JC Parets

The Stock Market Peaked In February

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Market tops are a process. They just don’t happen overnight like the headlines would often have you believe.

You’re seeing stuff like this today: “Dow futures tumble 300 points on worries over rising COVID-19 cases”

And people actually believe it. Heck, even the headline writer probably believes it.

But if you’ve been following along here, where we track the actual facts, stocks peaked back in February, and that was confirmed in March. 

The Nasdaq new highs list peaked on February 8th. And the Nasdaq Advance-Decline line peaked the very next day on February 9th.

That same week US Small-caps and Micro-caps decided to stop going up as well:  [Read more…]

Filed Under: ASC

Intermarket Insights: Relative Trend Review

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From the desk of Steven Strazza @Sstrazza and Grant Hawkridge @granthawkridge

One of the main themes we discussed in the Q3 Playbook we published last week is the lack of any directional bias for equities on a relative basis.

We’ve been obnoxious about the trendless environment for equities on an absolute basis… and now we’re noticing a lot of the same play out in many of the relative trends we monitor.

When there is no edge on absolute terms, we can at least try and generate alpha by taking advantage of relative trends through pair trades.

But, right now there’s really nothing out there giving us an opportunity to do so. This is about as rough of an environment for money managers as you’ll find.

All we see is sideways, sloppy, range-bound action… Standard year-two stuff!

To illustrate what we mean, let’s take a look at each large-cap sector SPDR relative to the S&P.

[Read more…]

Charting the Second Half w/ Jay Woods, John Kosar & Grayson Roze

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The good folks at Stockcharts.com put together a fun panel and asked each of us to bring 2 charts: Which one tells the story of the first half the best? And which chart am I watching most as we head into the second half?

I’ve been friends with Jay Woods for a long time and I’m now getting to know John Kosar’s work, and I can tell you these are some smart dudes. You want to listen to what these guys have to say.

Enjoy! [Read more…]

Commodities Weekly: Spring Wheat has Sprung

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From the desk of Steven Strazza @Sstrazza and Ian Culley @Ianculley

Opportunities are springing up in the commodity space!

Yes, energy, base metals, and (especially) precious metals continue to consolidate below overhead supply.

But this doesn’t necessarily speak to weakness… 

In fact, much of the sideways chop in commodities is taking place at logical levels of resistance. And aside from the dramatic sell-off in lumber, we see more upside resolutions than violations of critical support levels.

We recently pointed out that base metals managed to hang tough in the face of a significant correction in copper. And this week, tin is breaking out to new all-time highs.

OJ is also breaking loose this week after repeatedly testing the upper boundary of a multi-year base.

But this week, we’re going to focus on a breakout in a section of the commodity market that hasn’t received much attention lately: grains.

Since the explosive moves we witnessed in the spring, much of the grain market has quieted down. However, it’s impossible to ignore this big base breakout in Minneapolis Spring Wheat. [Read more…]

New Lows For Yields Means Messier For Longer

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From the desk of Steven Strazza @Sstrazza and Grant Hawkridge @granthawkridge

It’s a tale of two markets. 

The weight of the evidence remains mixed across asset classes. We also continue to see more and more risk assets struggle at overhead supply. This is particularly true for equity and commodity markets.

From an intermarket perspective, most risk appetite ratios and risk-on relative trends are either moving lower or are rangebound.

Simply put, there’s little in terms of directional edge for investors. The data remains split right down the middle — and there are sound arguments for both the bull and bear case.

Although the information we’re getting from the Bond Market is much more consistent these days. And what we’re seeing is suggesting lower yields for longer.

Let’s take a look… 

[Read more…]

The Bears Are Hibernating

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From the desk of Steven Strazza @Sstrazza and Grant Hawkridge @granthawkridge

Several weeks back, we discussed the fact that new lows were non-existent across just about all of the major averages in the US.

It’s pretty hard for a market of stocks to decline in any meaningful way without an expansion in downside participation. And we just aren’t seeing any signs of this when looking through our breadth chartbooks and new low indicators – not even on shorter timeframes. This remains the case today.

We’ve been pounding the table on our view that this is nothing but a messy market, as well as the fact that many significant risk assets are chopping around key resistance levels.

So you would think this would be an excellent opportunity for the bears to take control… But, they just can’t seem to get it done! Let’s dive into some of our breadth and sentiment indicators and see what they’re currently saying about this.

[Read more…]

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