Expert technical analysis of financial markets by JC Parets
by Tom Bruni
From the desk of Tom Bruni @BruniCharting
From a Precious Metals’ perspective, Palladium has been a clear leader for over a decade. Despite its strong long-term performance, a sharp March drawdown has people wondering whether this is the end of its reign over the Precious Metals’ space.
In this post, we’re going to outline our “keep it simple stupid” approach to answering that very question.
Let’s jump into it. [Read more…]
From the desk of Steve Strazza @Sstrazza
For the week ended Friday, June 5, 2020:
Every weekend we publish performance tables for a variety of different asset classes and categories along with commentary on each.
This was a big week for market bulls as a myriad of consolidations resolved to the upside while the powerhouse Nasdaq 100 $QQQ finally became the first major index to reclaim its all-time highs. The only assets to post negative returns this week were the usual “safe-havens” such as Treasuries, Yen, and Precious Metals. Everything else was green. How’s that for improving risk-appetite?
In this post, we’ll highlight that this broadening participation and flight towards risk-assets is more than just a one-week phenomenon. We’ve seen this type of price behavior in some asset classes for over a month now.
by JC
Do you know when stocks making new 52-week relative lows is actually bullish? When we’re talking about Consumer Staples.
You see, when the market is falling apart, you’re going to see a sympathy bid, specifically on a relative basis, into Consumer Staples. In other words, no matter how bad things get, we’re still going to drink beers, smoke cigarettes, brush our teeth and wash our dishes. Those things won’t change. We call them Staples.
On the flip side, when stocks are doing well and the major indexes are in uptrends, or bull markets if you want to call them that, Staples are going to underperform. Their safer-haven status and lower beta components tend to lag during the good times.
You can see that here: [Read more…]
by JC
Here’s a trade I like a lot right now.
It’s in the right sector. The trend is in the right direction. And Momentum is confirming it all. [Read more…]
From the desk of Steve Strazza @Sstrazza
In recent weeks, we’ve witnessed a powerful rotation as many of the secular laggards have assumed short-term leadership positions.
In today’s post, we’re going to take a stab at using a new visualization tool in order to illustrate this recent changing of the guard.
This scatter plot is comparing the maximum drawdown from 52-week highs to the March lows (Y-Axis) with the short-term performance off of the May 13th low, among all of the 150+ Dow Jones Industry Indexes. The plot-sizes are based on how large the current drawdown is… In other words, the bigger the dot, the bigger the drop.
From the desk of Steve Strazza @Sstrazza
Thanks to everyone for participating in this week’s Mystery Chart. It was a bit of a layup, as most of you were bullish, recognizing the powerful failed breakdown and follow-through back above critical former support.
We would agree and like this chart for a counter-trend move right now as well. But the reason we chose it was really for informational purposes, as we are seeing continuation patterns resolve higher all over the globe right now.
The more of these patterns that resolve to the upside, the stronger the weight of the evidence builds in favor of other consolidations working themselves out higher as well. We are seeing this across all areas of Domestic and International Equity Markets, many of which we’ll highlight in this post.
by Tom Bruni
From the desk of Tom Bruni @BruniCharting
Today I want to follow up on JC’s post about the direction in which consolidations are resolving, specifically as it relates to Yen/Bonds/Gold and other intermarket risk barometers in our toolbelt.
Let’s take a look at the charts and see what conclusions we can draw and what questions we can ask about the future.
by JC
What do we know is fact?
Market prices trend.
Stocks go up mostly together for a while. And Stocks go down together for a while. Sometimes, they go sideways.
It doesn’t matter if you’re a Technical Analyst, fundamental analyst, economist or whether you look at the moon and the stars to make your buy/sell decisions. You cannot argue with the fact that stocks prices trend.
This is why technical analysis is so powerful. All we’re trying to do is identify the direction of the trend. That’s it. If we’re on the right side of that trend, we’re going to be right more often than wrong. This is because there is a much higher probability of a trend continuing in the direction that it’s headed vs it completely reversing.
There are signs, of course, that allow us to get out of the way when risk is elevated. But to be perfectly clear, those are much more rare occasions. You guys who have been reading this for a long time already know that. How often am I all of a sudden Mr. Bear and the world is ending? Rarely. And that’s because stocks have mostly been in uptrends the past decade.
What’s happening today? Consolidations are resolving higher, not lower. Our longs are working incredibly well. Any shorts haven’t. That’s information.
Our Bull Market Checklist has also been really helpful. I encourage you to go back and go through the list yourself.
There are stocks we want to own. They’ve been working.
Defensive areas are rolling over: Bonds, Gold, Yen, Consumer Staples Relative, etc…
I think that’s a positive for stocks.
And how about the news? Fortunately, I don’t watch. But I can only imagine.
Stocks ripping in face of that I think says something.
What am I missing here? Let us know!
JC
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