This week I dropped by the News Corp building to chat with Liz Claman on Fox Business. Liz simply wanted to know what we want to be buying and what we want to be selling. I think we need to be watching last year's highs in both the S&P500 and Russell3000. If prices are above those levels, it's hard to be bearish. When you ask what will drive price higher, I'm in the camp that mega-cap tech, which represents over 20% of the S&P500, will continue to be a tailwind for markets.

Here is the interview in full:

This morning I was over at the Nasdaq in Times Square chatting with Amber Kanwar on BNN. We discussed why I think U.S. Stocks continue to rally and which key sectors will drive prices higher. Within each of these very important sectors, there are large-cap stocks leading the way for them. I think we're closer to the beginning than the end of this move higher in the S&P500 and these other important sectors. At the end we touch on why extremes in sentiment could be the catalyst to send British Pounds even higher.

Here is the interview in full:

We want to look at the broad market and treat every single stock market index as a tiny piece of a much bigger puzzle. The Dow Jones Transportation Average has been a great leading indicator for stocks as an asset class over the past few years and we continue to want to treat it that way. Remember, the Transports peaked at the end of 2014, 6 months before the S&P500 and this year the Dow Transports bottomed out in January, well before the S&P500 and the other major indexes bottomed out in February. So now what?

When you talk about the most important sectors in the stock market, financials certainly have to be near the top of the list. Technology is the largest sector in the S&P500 by market capitalization, but bull markets need participation out of Financials. For argument sake, we'll chalk these up as the two most important sectors in the market together representing over a third of the entire S&P500. Today, we'll focus on the Financials and why I think they are now breaking out.

There is a constant conversation among market participants about which indexes are the better representation of the stock market, particularly in the United States. While the media often quotes the Dow Jones Industrial Average daily changes, professionals tend to steer towards the S&P500. The argument normally revolves around the price-weighted nature of the Dow Jones Industrial Average vs the market-cap driven S&P500. The diversity of 500 stocks in the S&P is also a key point when compared to just 30 stocks for the Dow.

Today I want to talk about why I think the Dow Jones Industrial Average is underrated and why I think it is one of the most useful indexes for any stock market participant. 

Every month I host a conference call for All Star Charts Members where we discuss ongoing themes throughout the global marketplace as well as changes in trends where new positions would be most appropriate. This includes U.S. Stocks & Sectors, International Stock Indexes, Commodities, Currencies and Interest Rate Markets. We have been bullish towards both U.S. and International stocks since early July and are seeing money rotate into new sectors and countries showing leadership. We will be discussing this in detail Wednesday.

We will also be focusing particular attention on precious metals: gold and silver. I think we've seen enough evidence to suggest there is a major trend in place and will discuss ways to profit from it in the coming months.

This month's Conference Call will be held on Wednesday August 17, 2016 at 7PM ET. Here are the Registration Details:

The way I learned it, "The bigger the base, the higher in space". In other words, the longer prices consolidate in a narrow range, the more powerful the ultimate resolution. I think we have a good example of this type of behavior in the Industrial Sector. Today we're breaking down why I think there is a lot of room to the upside for these guys.

As we reach into the mailbag this week, Rob from Toronto writes:

Hi JC,

Love the membership, keep up the good work! Can you go into detail regarding using line charts, bars or Candlesticks?

Thanks,

Rob

This is a great question. Some people use Japanese Candlesticks, others use

Every 2 weeks I sit down with the good folks at Benzinga to chat about the markets on their morning radio show. Today we discussed the rotation in stocks out of more interest rate sensitive sectors like Utilities and Staples and into things like Technology and Financials. This is all taking place as interest rates mean revert higher and bonds come off their highs. I think rates continue to spike and bonds are still a fade on any strength. We also go over Crude Oil, Apple and precious metals.

Here is the full interview:

U.S. Treasury Bonds have been in a beautiful uptrend for 35 years. This is nothing new. But within uptrends, we often see severe corrections that have presented very favorable risk vs reward opportunities in the past. I think today is one of those scenarios. Here are the details:

One of the things that I take most pride in is my ability to keep an open mind and consider every outcome. This goes for all markets, not just stocks. But today I have a solid if/then scenario that I think every U.S. stock market bull should be watching. If this particular index is above certain levels, not only do I see no reason to be bearish, but I think having above average long exposure is warranted.

Every 2 weeks I sit down with the good folks at Benzinga to chat about the markets on their morning radio show. Today we discussed the recent breakouts in important sectors like Technology and Industrials. The fact that we're seeing expansion in breadth across other countries, particularly in Emerging Markets and Latin America, suggests there is real risk appetite out there for stocks. There are many favorable risk vs reward opportunities out there today and we went over several of them this morning.

Here is the full interview:

The market is a never ending puzzle that we are constantly trying to solve. It's not like a jigsaw puzzle where once you put the pieces together your job is done forever. In the case of liquid markets, the pieces of that puzzle are always changing and therefore the conclusions are appropriately evolving. I thought today would be as good of a time as ever to go over the evolution of my macro thesis about stocks over the past 15 months.

Since late March and early April, most of the major stock market indexes around the world, U.S. included, consolidated in a sideways range. The dilemma/argument among my friends and I was in which direction would these consolidation resolve? As it turns, out, it has been to the upside. We're not just seeing the S&P500 and Dow Jones Industrial Average breaking out to new highs, we're seeing similar behavior around the world.

Today we're looking at what I think is the most bullish chart on earth.

Throughout the week I did a ton of intermarket work comparing many markets with each other. This is a great exercise and really helps me get some perspective on the flow of money around the world. Remember, it doesn't just disappear. When money leaves one asset, let's say Japanese Yen or U.S. Treasury Bonds, it goes elsewhere. In this case, we're seeing that money flow towards banks as well as Japanese and European stocks.

There are two ways to use this information. First, simply take the money flow data as confirmation of other things we're seeing around the world, particularly those that we discussed in this week's conference call. Second, through execution purposes benefiting from narrowing or widening of these spreads. I personally use them in both ways.

Here are some of the more interesting developments that I found:

[hide_from accesslevel="premium"]Here is the video recording of the July 2016 Monthly Conference Call for Members Only

In the call we discuss:

• What Is The Risk vs Reward Being Long U.S. Stocks?
• Are Global Stocks Confirming?
• Europe and Japan Have stabilized
• Industrials and Tech are not tops!
• Which Metals Do We Want To Buy? And How High Can They Go?
• What to do with Cotton and Wheat?
• How Does The Base Metal Complex Fit into this theme?
• Which Tech Stocks Do We Buy?

One of the biggest reasons why we've been hesitant to be bullish of stocks, particularly as an asset class, since early April is because of the severe underperformance from bank stocks. Not only do we need participation out of Financials during bull markets, but we need them to lead. Unfortunately, they've been doing the exact opposite, and dragging stock market indexes around the world lower.

Has something changed?

These are the details from yesterday's Mystery Chart