Expert technical analysis of financial markets by JC Parets
by JC
We’re over 3 and half months into a stock market correction that I keep being told is just the beginning of a major crash.
I’m just not seeing it.
This continues to look like a regular seasonal correction that we’ve seen so many times around this time of the year.
In other words, if the market was NOT correcting like it has been, that would actually be very unusual.
Here’s what each of the sectors and major indexes have done since the new 52-week highs list peaked in July: [Read more…]
From the Desk of Steve Strazza @Sstrazza
Monday night we held our September Monthly Conference Call, which Premium Members can access and rewatch here.
In this post, we’ll do our best to summarize it by highlighting five of the most important charts and/or themes we covered, along with commentary on each.
Let’s get right into it!
by JC
Did you think inflation was just going to come and go?
Just like that? And now we all move on?
I highly doubt that it’s that simple.
According to the bond market, inflationary pressures are likely just getting started.
This is a $120 Trillion asset class that’s so big there’s just no where to hide.
For instance, take a look at the Inflation-protected Treasury Securities, that we refer to as TIPs. And when you compare them to nominal yielding Treasury Bonds, you’ll notice the new 52-week highs this week in the ratio between the two.
This is what the bond market is pricing in for inflation. Not the angry economist on the internet. Not the pretty lady on basic cable.
This is the bond market. This is whose opinion actually matters: [Read more…]
by JC
This is the video recording of the October 2023 Mid-month Conference Call.
by JC
Now is the time.
If stocks are going to go, this is when they usually do it.
The Dow Jones Industrial Average is only 9% from making a new all-time high.
So is the S&P500.
And what do I think the catalyst is going to be?
Let me rephrase that….
What do I think the catalyst needs to be?
A weaker US Dollar! [Read more…]
From the Desk of Alfonso Depablos @Alfcharts
As the market has been sending mixed signals since July, we’re seeking information from our risk appetite indicators to try to gauge the next move.
One of our favorite ways to measure risk appetite is to compare the consumer discretionary sector with consumer staples. This tells us whether market participants are positioning themselves defensively, or embracing risk.
Discretionary stocks include automobiles, retailers, and homebuilders, among other things. Theoretically, we’re talking about products and services consumers buy with their discretionary incomes.
Meanwhile, staples are what “consumers” will buy regardless of how bad economic conditions get… things like food, toothpaste, cigarettes, etc.
When this ratio points higher, it illustrates a healthy degree of risk-seeking behavior among investors. Alternatively, when it points downwards, it speaks to a defensive tone and typically occurs during bear markets.
by JC
Are you ready for the end of the year squeeze?
Many investors think it’s not coming and that the market is going to crash instead.
In fact, CTAs have never been this short. The last few times they were anywhere near this bearish, stocks went on to have some of the greatest rallies in history. I remember them well: [Read more…]
by JC
One of the better indicators of a healthy bull market is when you see Consumer Discretionary stocks (the things we want) outperforming Consumer Staples stocks (the things we need).
The ratio between Discretionary and Staples is one we look at during bull markets, to confirm what the indexes are doing, as well as in bear markets to find divergences that may turn before the indexes themselves (see ’08-’09).
This really has been one of the more reliable indicators for many years.
And wouldn’t you know it, as pessimism spikes, volatility pops, and the permabears begin to pound their chest again, Discretionaries are putting in higher lows relative to Staples.
This is classic sector rotation we see during healthy market environments: [Read more…]
