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[Premium] Our Risk Management Strategy For The U.S. Stock Market

September 24, 2018 by JC

We have been pounding the table to be buying U.S. stocks and ignoring the bearish rhetoric coming from almost everyone these days. I have never seen a stock market crash where people have been this prepared for it. I get an email a day warning me about this coming historic crash. We’ve happily taken the other side of this nonsense and continue to believe the path of least resistance is higher, much higher in fact.

However, the market doesn’t care what JC thinks and is going to do whatever the heck it wants. That’s life. So ahead of any serious correction, we want to identify levels where we would start to become much more neutral towards equities. Tightening stops, being less aggressive from the buy side, owning put protection and strategies like these are most appropriate under these conditions. Today, I’m going to lay out what it’s going to take for us to approach the market from a more neutral to bearish perspective: [Read more…]

The Two Most Important Charts In India

September 24, 2018 by Tom Bruni

Last week was our Members-Only Conference Call, where we discussed what we’re seeing in Equities, Commodities, and Currencies. During our discussion around Equities there were two themes that came up over and over again due to their impact on the overall market’s direction: weakness in the Financial Services sector and small-cap under-performance.

Given the mixed signals we continue to get from this market, I wanted to share my thoughts on these themes and get feedback on what you all are seeing out there. [Read more…]

Communications Services Sector Changes

September 22, 2018 by Tom Bruni

This week the Global Industry Classification Standard (GICS) expanded the Telecom Services sector to include Consumer Discretionary and Information Technology components, with it being renamed the Communications Services sector next Friday, September 28th.

In this post I want to highlight the major changes to the sector classifications, chart the new sector (using the back-filled IXCPR Index), and then finish up with some of the components that are the most actionable. State Street, which runs the popular Sector SPDR ETFs, has created a comprehensive document on these changes that I’d encourage you to read in full to understand all the nuances surrounding these changes.

[Read more…]

All Star Interviews Season 2, Episode 6: Ryan Detrick of LPL Financial

September 20, 2018 by JC

In this episode I asked my friend Ryan Detrick to come talk about the quantitative work he does as part of the technical analysis he provides for advisors at LPL Financial. I have been following his work for years and have gotten to know Ryan well during that time. I was really looking forward to this conversation and it exceeded all of my expectations. Ryan does an excellent job of using basic mathematics to debunk popular myths told to investors about the market. We discuss the impact of a rising rate environment on U.S. stocks, the Yield Curve, Stock Market Seasonality and some of the things he is currently seeing in the market. This is a can’t-miss episode! [Read more…]

[Premium] Monthly Conference Call Video Recording September 2018

September 20, 2018 by JC

This is the video recording of the September 2018 Conference Call. After reviewing approximately 5000 charts from all over the world, these are my conclusions.

First of all, there are exponentially more bullish looking stocks than bearish ones. This goes for both U.S. Stocks and those from all over the world. The Credit Markets are confirming this bullish outlook for stocks with risk appetite coming from the largest market in the world.

There are plenty of opportunities to make money this quarter and I tried my best to lay them out in an easy to follow process. Here is the video in full: [Read more…]

[Chart of the Week] Is The Market Ready For A US Dollar Collapse?

September 18, 2018 by JC

We’re always focused on positioning. Stocks don’t go up because of some article written by a 26 year old journalist who has never made a trade in her life. Stocks move based on positioning from institutions. When the market is caught leaning the wrong way, the unwind can create spectacular moves. This is the key to the market: positioning, not the noisy media.

As many of you know, every single day I look for risk vs reward opportunities that are skewed in our favor. We’re not here to be right, we’re only here to make money. There is a big difference between the two. In other words, we don’t care if we get it wrong. We just want to make sure that when we are right, that we’re really really right. Isolating asymmetric risk vs reward opportunities is how we do that, and I believe we do it very well.

I really don’t think this market is ready for the US Dollar to collapse. We’ve had a monster rally in the Greenback all year and emerging markets and precious metals have felt the pain. I believe that’s about to change dramatically. [Read more…]

[India Chart of The Week] Minding The Gap In India’s Major Indexes

September 16, 2018 by Tom Bruni

The Island Reversal is a rare but important pattern that has shown up across many of India’s Major Indexes this month. As a result, I want to use this post as an educational opportunity to highlight what this pattern is, as well as explain how we’re interpreting it in today’s market. [Read more…]

Bonds Could Be The Catalyst To Take Stocks Much Higher

September 16, 2018 by JC

There are tiny little irrelevant markets everywhere like Pot stocks and Crypto Currency. These could disappear tomorrow and it won’t matter. The sovereign wealth funds, hedge funds and other monster institutions that make markets move have to be in the bond market. They’re too big not to. So if you want an inside look at the money flow from one place to another, an intermarket approach really helps.

I’ve been a lonely stock market bull for most of this year. It feels like every time I’ve told people that I think we’re closer to the beginning of a bull market than the end, they think I’m crazy. That reaction has gotten me even more bullish. Not only does price continue to suggest we’re heading much higher, but sentiment and positioning points towards the same.

I’ve made the argument that Technology is going to take us much higher, as it is just now finally breaking out above the March 2000 highs. It took 17 years to digest those 1990s gains. We’re now just moving on. All that market cap getting going is one obvious catalyst that I’ve been talking about since last year.

Another big one has to be the bond market. If interest rates get going, selling in bonds is likely to continue. That money needs a home. Stocks and commodities are likely it. First, let’s see what rates themselves are signaling before making plans on what to do. Here is the U.S. 10-year yield. This month marks the 37th anniversary of the high in rates in 1981, about 5 months before I was born. I’ve known nothing but rising bond prices and falling interest rates: [Read more…]