Expert technical analysis of financial markets by JC Parets
by Tom Bruni
From the desk of Tom Bruni @BruniCharting
We always hear the phrases “fading strength” or “selling into strength” from market participants, but what does that mean from a practical standpoint? How do you know what to sell? When do you sell?
In light of those questions, this week’s “Chart of the Week” is going to help provide some context around the types of characteristics we look for when choosing stocks to fade.
by Tom Bruni
Over the last three weeks Sun Pharmaceuticals has been doing its best Deutsche Bank impression, losing roughly a third of its value and trading at levels not seen since March 2013.
As the largest component of the Nifty Pharmaceuticals Index this performance has been a major drag on the index, however, equally-weighted charts can offer us a much better read of the sector’s health.
by JC
I’ve seen way too much at this point to underestimate what the market is capable of doing. People call me all the time and say, “JC crazy market huh?” or “Did you see that crazy move in XYZ”. Yea I saw it. So what? As Jay-Z said in his latest album,
if everybody’s crazy, you’re the one that’s insane”.
How high can a stock go? Much higher than you think. How low can a stock go? Zero. How low can your account go? In the negatives where you actually owe money. That’s the deal we make when we enter the marketplace.
So there is being overly dramatic and there is being realistic. We’ve seen these clowns calling for market crashes since a month after the last one was over. They prey on vulnerable hard working citizens preaching the end of the world and they make a ton of money doing it. They’re terrible people.
It’s my job as a market participant to identify the risk that is on the table at any given time. Until just recently, the risk in U.S. Stocks had been higher for years. Not being aggressively long, was the real risk in my opinion. All of that changed in early October.
So here we are 2 months later and stocks are near their lows and we’re all wondering whether this is just a long sideways consolidation to reset the market sentiment before heading higher? Or is this massive distribution that will lead to a more significant break?
I think there are three charts that we want to pay attention to. I firmly believe that a much more severe correction is on the near term horizon if these charts start to break, and we’re awfully close. [Read more…]
by JC
You hear it all the time, “Cash is King”. But we forget that it really can be. Not all the time, very few times in fact, but cash does serve a great purpose.
There are a lot of institutions that are not allowed to go to cash, as part of their mandate. The majority of investors, however, do have that option. Why not use it?
You’re going to see a lot of the passive investing community advise against cash. “Market sell-offs are an opportunity to buy more at lower levels”, they say. “You’re not disciplined or smart enough to get back in”, they preach. “Just buy and hold and everything will be ok”. It’s all based off this theory that the market always goes up. I guess if you trust data based off the tiny sample sizes that we have, you’ll believe anything. [Read more…]
by Tom Bruni
From the desk of Tom Bruni @BruniCharting
Crude Oil is down roughly 35% over the last two months as record bullish sentiment unwound and prices fell in what was essentially a straight line. There hasn’t been any reason to bottom-fish this market, but today we received our first indication that a short-term bottom may be in.
If you’re bullish coming out of this Autumn’s correction, then you’re betting that recent lows in the indexes mark significant bottoms.
While we at All Star Charts don’t believe Bulls are out of the woods just yet, we’re of the view that if stocks can manage to trade in a sideways range for any length of time, that might be long term bullish for stocks and the economy in general.
With this as a backdrop, believers of the bull case should look at Walmart $WMT as a barometer of the American consumer and the willingness of investors to step in and take some risk. [Read more…]
by JC
Over the years I’ve been asked this question a lot: “What do I do? Should I sell now?”
This is often accompanied by a story about how they bought a stock or asset and it went down in price instead of up. The blame usually goes to a financial advisor or local friend who gave them “the tip”. They entered into the position without a plan and now they don’t know what to do with their unrealized losses. [Read more…]
Happy Thanksgiving!
During our family’s feast this year I’ll be reflecting on my gratitude to each and every one of our subscribers, and to my team here at All Star Charts. I could not ask for a more engaged audience and a more top-notch group of analysts to work with. This year marks the maiden voyage of the All Star Options corner of the All Star Charts platform and the response from institutional and retail subscribers has exceeded my expectations and it makes me ever more motivated to continue crushing it for years to come for all of you.
Sincerely, thank you.
Now let’s talk business…
This week we put an options spread trade on in Goldman Sachs $GS and it serves as a vivid reminder that we’re not looking for perfection here. We’re looking to follow a process.
[Read more…]
