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All Star Charts

Expert technical analysis of financial markets by JC Parets

Emergence of Divergences

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The process of analysis is such that there are times when trends emerge and times when things are simply messy. Over the past week, with the halt in the trend of the major indices, something emerged on the charts. This something demanded attention.

Negative divergences appear when momentum does not follow the price movement. When there is a disparity between the price move and the indicator, it is a sign of caution. Not to say that a contrary position can be assumed immediately, but the sentiment certainly turns cautious!

So what is it that’s hinting at being cautious in this market?

Let’s take a look! [Read more…]

[PLUS] Weekly Momentum Report & Takeaways

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From the desk of Steve Strazza @Sstrazza

Check out this week’s Momentum Report, our weekly summation of all the major indexes at a Macro, International, Sector, and Industry Group level.

By analyzing the short-term data in these reports, we get a more tactical view of the current state of markets. This information then helps us put near-term developments into the context of the big picture and provides insights regarding the structural trends at play.

Let’s jump right into it with some of the major takeaways from this week’s report:

* ASC Plus Members can access the Momentum Report by clicking the link at the bottom of this post.

[Read more…]

Small Cap Breadth Running out of Breath?

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One of the most telling and obvious risk-on indicators would be the Nifty Small Cap 100 index. Why is that so?

Because when you look at a market rally, the longevity of that particular rally can be gauged by market participation. This is something that should be viewed closely. If a particular index is making new highs, how many stocks are contributing to that move?

Is it a handful? Is it a majority of the stocks? These are data points that will hint at the inherent sentiment of the move.

So let’s take a look at what the Small Cap-100 new highs are telling us. [Read more…]

Putting The Recent Surge In New Highs Into Context

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From the desk of Steven Strazza @Sstrazza and Grant Hawkridge @granthawkridge

We’ve pounded the table about historic breadth thrusts since we first saw these readings start to pop up in early June of last year.

It’s now a year later, and we’re still seeing them… In fact, the S&P 500 recently registered its highest percentage of new 52-week highs in history – absolutely crushing the historic reading we saw in Q4 of last year.

So, why is this important?

These extreme readings are as bullish as it gets and are a very common characteristic of the early innings of a fresh bull market. It’s as simple as that, right?

Well, yes… But, not exactly…

While these extreme readings in our breadth indicators are undeniably bullish looking out over any period of more than a few weeks/months, over the very near-term these same bullish developments are actually cautionary signals and are often evidence of exhaustion and tend to be followed with some corrective action.

But what happens when our original November 2020 breadth thrust of 28% is eclipsed by an extra 16% about 6 months later?

Such extreme surges are incredibly rare… Let’s have a deeper look at what this could mean for investors over both long and short timeframes.

[Read more…]

International Rotation Points to a New Frontier

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From the desk of Steve Strazza @Sstrazza and Grant Hawkridge @granthawkridge

Thanks to everyone who participated in last week’s mystery chart.

We asked whether this chart had the momentum to finally reverse course and break loose from the grips of its primary downtrend.

The responses were mixed, with many wanting to wait for more information… In many cases, looking for confirmation of the impending breakout.

Well, not much has changed as the chart has yet to make a decisive move from this key level.

The chart was a weekly candlestick view of the MSCI Frontier Markets ETF $FM.

Let’s dive in and see how we want to play this index comprised of stocks from some of the least developed countries around the world.

[Read more…]

RPP Report: Review. Preview. Profit. (06-16-2021)

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From the desk of Steve Strazza @sstrazza

Welcome to our latest RPP Report, where we publish return tables for a variety of different asset classes and categories along with commentary on each.

Looking at the past helps put the future into context. In this post, we review the absolute and relative trends at play and preview some of the things we’re watching to profit in the weeks and months ahead.

We consider this our weekly state of the union address as we break down and reiterate both our tactical and structural outlook on various asset classes and discuss the most important themes and developments currently playing out in markets all around the world.

And at present, markets are a total mess and full of mixed messages as most major stock market indexes continue to churn sideways in consolidation patterns, while many risk-on commodities are in corrective phases.

While the weight of the evidence still remains in the bullish camp, bears seem to add to their list of talking points with every passing week. We believe the highest probability outcome over the coming weeks to months is for risk assets to remain in a mixed and messy environment. Once we begin to see evidence that indicates the current “chop fest” is nearing an end, which could simply come in the form of a reduction in the number of bearish data points, we think this party resumes in the direction of the primary trend… which remains aggressively higher in most risk assets.

But as the evidence becomes increasingly mixed, so does the way we want to approach the market and position ourselves to profit from the present environment. While we’re still buying plenty of stocks exhibiting leadership all around the globe… for the first time in over a year, we’re focused more on shorting the losers.

Check out some of our recent shorts on our trade ideas page.

Last week, we discussed how a lot of the most recent evidence has tilted back in favor of the bulls with a number of upside resolutions, particularly in international equity indexes.

Well, what a difference a week can make. This past week, we saw the opposite as some major risk assets are now failing at key levels.

Again, this speaks to the mixed messages the market is sending now that these holding patterns are beginning to resolve. They’re resolving in both bullish and bearish directions… at least for now.

In today’s post, we’ll offer the opposing view from last week. We will also highlight some key charts that are experiencing bearish resolutions.

[Read more…]

The All Star Momentum Scan

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We debuted a new scan recently which goes by the name- All Star Momentum.

All Star Momentum is a brand new scan that pinpoints the very best stocks in the market. This time around, we have incorporated our stock universe of Nifty 500 as the base. Among the 500 stocks that we follow, this scan will pump out names that are most likely to generate great returns.

[Read more…]

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