This is a lesson I had to learn the hard way for sure. Early in my career I used to always want to be trading the Russell 2000 or the Nasdaq and sometimes even S&P futures. Some people can do this successfully. Most cannot.

A wise Egyptian man once taught me that, If you trade the Averages, You’ll Get Average Returns. This made a lot of sense to me when he first said it, because I didn’t have great experiences with that strategy up until that point.

The reason I bring this up today is NOT to convince you not to trade the index ETFs or Futures. You do what you have to do! The point of this post is as a reminder that we use Technical Analysis to identify trends. These trends are in all asset classes – Stocks, Bonds, Commodities, Currencies, Interemarket relationships, Crypto and others. Once we identify the trend, then we can figure out the best way to try to profit from its theme of rising or falling prices.

We’ve been in the camp that US Stocks have been in a sideways range since January of 2018, over 21 months. You can call this a cyclical bear market. You can call it a sideways range. Pick your preferred nomenclature and let’s move on.  [Read more…]

If we want to know what the largest institutions in the world are doing, we have to look at the biggest stocks. If you have 100 Billion Dollars to put to work, you’re not buying crypto currencies or pot stocks in Canada. The big boy sandbox is where we want to look.

My friend Todd Sohn says that your best players are supposed to score a lot of your points. The S&P500 is a cap-weighted index, which means that it owns more of the stocks performing well and less of the ones doing poorly. [Read more…]