From the desk of Thomas Bruni @BruniCharting

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If you're a market participant, Lumber should be on your radar. The weight of evidence suggests that this market has upside roughly 20% upside from current levels and offers a trade opportunity not correlated to US equities.

Lumber has been in a structural downtrend since breaking down from a symmetrical triangle in early 2015. The decline continued throughout the year, with prices putting in a failed breakdown and bullish momentum divergence at long-term support near 215. After confirming the failed breakdown by closing back above the May 2015 lows, prices consolidated for 5 months and have now broken out above a multi-year downtrend line.

This morning I was on the Benzinga pre-market radio show, where I am invited as a guest every other Thursday. So basically twice a month a rap with the boys about the direction of the Stock Market, both U.S. and globally, Interest Rates & Bonds, and more recently precious metals and precious metal stocks.

Here is this mornings radio hit in full. Enjoy:

In this week's members-only letter we discuss the following topics:

• Why Are Biotechs and Regional Banks Now On Our Radar?
• Why Did Everyone Miss This Monster Rally The Past 6 Weeks?
• Which Stock Market Indexes In the U.S. Will Perform Best This Month?
• How High Can U.S. Interest Rates Go and How Will That Affect Bonds?
• Our Upside Price Targets In Apple, Now Updated
• What Is The Most Important Thing To Watch In The Gold Market?
• What Else Should We Be Watching In Precious Metals?
• Our Favorite Trade To Profit From A Weakening U.S. Dollar

You guys know that I prefer to incorporate more of a weight-of-the-evidence approach to markets rather than basing my decision making on a single indicator. We look at stock markets all over the world to find themes, both bullish and bearish, and then take advantage of them within U.S. markets. I then take a similar approach and go sector by sector in the U.S., including a series of sub-sectors, to break it down even further and find themes within the U.S. As you guys well know, the reason we were bullish since January was because of the weight-of-the-evidence internationally, not because of what we saw in the S&P500 or Dow Jones Industrial Average.

Today I conducted an experiment where I went sector by sector doing my normal annotations and note-taking, but this time I asked myself 3 questions for each sector/sub-sector:

Changes in trend rarely get cleaner and as well-defined as the distribution taking place in the semiconductor space. The infamous head and shoulders topping pattern is as clear as day in this one. Today we're looking at the Philadelphia Semiconductor Index, which is the benchmark for semiconductors. This basket of chip stocks appears to be near a completion of a massive multi-year distribution pattern.

This is a weekly chart of semi's putting in their highs last summer to begin the right side of this topping pattern. This one fits the description

With all of the bad news and negative sentiment surrounding the high yield bond market, I think this is a place where we want to be buyers, and no longer sellers. High yield bonds are just a fancy way to refer to "Junk bonds". At the end of the day, high yield is just that: high yield, because you're getting paid a higher return for the risk you're taking by owning junk. Both on their own and relative to the safe-haven U.S. Treasury Bonds, these things have been destroyed over the last few years.

Moving forward

How often do we hear one person ask another, “So what are the charts telling you?”, or “What does that chart say?”. Think about that. Charts don’t actually say anything at all. They’re charts. Charts don’t speak. So why do so many people want to know what the charts are saying?

Technical analysis is the study of the behavior of the market and market participants. The most important tool that we have as technicians is price. Movements in the price of an asset represent the changes in equilibrium between supply and demand. It just so happens that the best way to visualize these changes in equilibrium is in chart form. This is why many technicians prefer to be chartists. It is not necessary for a technician to use a chart

This week I was running up and down the east coast in meetings and conferences. With some of the free time I had left, I sat down with a few of my favorite financial journalists to rap about the markets. On Monday afternoon I was on Bloomberg TV and Tuesday I was on the Business News Network with Frances Horodelski. I don't have as much time to do TV like I used to in the past, so it was a fun experience for sure.

Here is the BNN interview in full:

On Monday afternoon I was over at the Bloomberg headquarters in New York City to discuss markets with Joe Weisenthal, Alix Steel and Scarlet Fu. Every time I've been on a guest on this show I've had pretty much nothing but bad news to share as far as the stock market is concerned. In January, all of our downside objectives were achieved and I've really changed my tune. I think this strength we've seen in stocks over the past month continues, particularly the relative strength in emerging markets.

Here is the video in full:

From the desk of Thomas Bruni @BruniCharting

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After rallying more than 13% over the past three months, EUR/GBP looks to be setting up on the short side.

Structurally this market has been in a downtrend since 2009, with selling accelerating further in late 2014 as support near .7750 failed to hold. After consolidating above .6930-.70 throughout the majority of 2015, prices moved to new highs and rallied back into broken support.

You guys who know me already understand why it is that I am constantly looking for whipsaws. The best risk vs reward opportunities are sparked from such events. We often refer to whipsaws as failed breakdowns or failed breakouts depending on the direction of the underlying trend. From failed moves come fast moves in the opposite direction, and that's why we look for them.

The idea behind support and resistance is that when markets meets resistance, or a level where supply exceeds demand, prices continue to fall from that price until eventually it breaks through it. Sometimes it tests resistance once or twice and sometimes 3 - 4 times, but the idea behind it remains the same. Once resistance has been broken

From the desk of Thomas Bruni @BruniCharting

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With Cotton futures nearly 75% off their 2011 highs, market participants may be looking for a reason to get long this market. The weight of evidence however, suggests there is likely another 15% downside ahead.

The daily chart spanning back nine years shows prices topping and subsequently beginning a downtrend in early 2011. Over the past eighteen months prices have consolidated as they attempted to break back above the 2012 lows and downtrend line from the 2011 highs. Despite its efforts, Cotton could not close back above the confluence of resistance at 68 and is now threatening to break through the lower end of the 57-68 range.

From a structural perspective the next logical area

[hide_from accesslevel="premium"]In this week's members-only letter we discuss the following topics:

• Why Emerging Markets Are Outperforming U.S. Stocks
• Did you Listen and Take Profits In Treasury Bonds Last Week?
• How To Make Money In Apple, Twitter, Yahoo and GoPro
• Which Developed Markets Should We Buy: Europe or Japan?
• Is It Time To Own China? Why?
• Which Stocks Will Lead the U.S. Stock Market Higher?

This weekend I did my regular global macro review. This is when I go country by country analyzing the weekly and daily charts of all of the stock markets around the world. Each chart includes a momentum study (14-period RSI) and a 200 period moving average that we use to help with trend recognition. I trade indexes all over the world, simply because I can. Why wouldn't I?

Precious metals are a sensitive subject in some circles. Discussions about gold or silver tend to bring out more anger and craziness than other assets. As someone who couldn't care less about what we're trading, Gold, Apple, Bonds, Australian Dollars or Go Pro, to me it's just letters and math. I find it kind of funny when people get extra sensitive about a specific asset. Precious metals bring out some of the most hilarious commentary.

Today, I want to break down Gold and Precious Metals from many different angles in order to put it into context from both a structural perspective and a shorter-term tactical outlook.

From the desk of Thomas Bruni @BruniCharting

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With the Yen rallying nearly 10% from intraday low to high in as many days, this breakout is not one to be ignored. Since the Yen has  a strong negative correlation with US equities, this inter-market relationship is an important one to keep track of regardless of whether you trade currencies or not.

Structurally the Yen has been trading in a seven point range at and below the 2006-2007 lows for the last 15 months. Late last year prices confirmed a failed breakdown by breaking back above the 2005 & 2007 lows, as well as the downtrend line from the 2012 highs.

Over the past two weeks prices have accelerated to the upside, providing additional confirmation that this market is headed higher. As long as prices can hold above support outlined in gray (.0082), then the weight of evidence suggests the first upside target is near the 161.8% extension of the late 2014-2016 range and prior support near .0098-.0099.

From the desk of Thomas Bruni @BruniCharting

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A few weeks ago global equity markets began to mean revert to the upside after many met downside targets and momentum positively diverged. For examples of this check out my posts from then here and here. The same failed breakdowns and bullish momentum divergences that sparked a rally globally are now present across many of the US sectors and indices.

Of the 41 US indices / sectors I follow, 28 of them have bullish momentum divergences on the daily charts and have either confirmed, or are working on confirming, a failed breakdown by trading back above a prior low.

From the desk of Thomas Bruni @BruniCharting

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Twitter has been a disaster of a stock for the majority of its time as a public company, but recent price action suggests a tradable bottom may be in on an absolute and relative basis.

Before getting into the price action, it's worth acknowledging the continued deterioration in sentiment regarding this stock in recent months. I've been negative on the stock for a while, but with the downside targets I outlined here being met, I don't see a reason to be overly pessimistic on the stock at current levels. With price action improving in the face of another poor earnings report and another slew of analyst downgrades, it appears, at least anecdotally, that sentiment is overly bearish in this name.

With sentiment suggesting a neutral/bullish stance is appropriate, let's see what price is indicating.

From the desk of Thomas Bruni @BruniCharting

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Regardless of how strong their brand may be, Disney continues to remain correlated to the S&P 500, as most stocks do during a bear market, and remains in a downtrend. Despite the neutral to bearish structural picture, the stock looks to be setting up for a tactical bounce in the coming weeks.

Structurally the stock remains range bound between 90 and the all-time highs at 122. During this recent selloff, prices retested the uptrend line from the 2009 lows, which also corresponded with the 38.2% retracement of the 2011-2015 rally. I don't believe in triple bottoms, and although this is the third time testing the $90 level, current evidence suggests the stock can stage a counter-trend rally before continuing to the downside.