One of the most effective ways to increase our odds of success is by focusing on assets that are not only trending higher on absolute terms but also outperforming their alternatives. 

This combination is a key ingredient of strong uptrends.

Right now, Gold checks both of these boxes. 

It’s not just flirting with all-time highs, but it’s also carving out a textbook trend reversal relative to the S&P 500. 

If we see gold breaking out of this base, then it will be time to favor rocks over stocks aggressively. 

Additionally, because of gold's defensive nature, it could signal a defensive rotation, and under that scenario, stocks could face a strong headwind.

When it comes to precious metals, Sam and Jason are the go-to guys. They break it all...

A simple moving average is a lagging indicator that technicians use to help with the trend recognition process. It smooths out the erratic day-to-day action and shows us the mean price over a stated period.

A rising average is indicative of uptrends, while a falling average is indicative of downtrends.

Moving averages can also be used to analyze a market's internals.

One of my favorite ways to use them is to measure the number of stocks holding above or breaking below their long-term mean.

If a stock is above its 200-day, it’s probably not in a downtrend.

The chart below shows the S&P 500 overlaid with the percentage of NYSE stocks above their 200-day moving average.

This gives us a broad view of what is going on beneath the hood. 

During strong and healthy bull markets, I expect the indicator to remain elevated.

The past couple of weeks have been rough.

Volatility is rising, and key groups are testing major levels—making me question just how bullish this market really is.

It feels like decision time.

Either this bull market holds, and we continue to spend our time looking for stocks to buy…

Or sellers take control and change the market’s character, and we start looking for stocks to sell.

When markets reach an inflection point, it’s always a good idea to check in on the biggest names.

These are the stocks investors want to own. The ones hedge funds anchor their portfolios with.

These are the bellwethers and the roadmap for everything else.

Last Friday, Steve asked me to send over the most bearish charts from my chartbook as a good exercise in playing devil’s advocate internally with the team.

Off the top of my head, I pointed to these.

After today’s market action, this one stands out even more.

Credit spreads are one of the most reliable indicators of risk appetite. If there’s stress in the market, it’ll show up in credit first.

When investors feel good, they buy high-yield debt. When risk appetite fades, they run to safety, favoring treasuries.

Historically, HYG/IEI has led major market moves, bottoming and topping ahead of stocks in past cycles.

Right now, it’s flirting with a failed breakout, struggling to hold above a key level of former highs. 

If...

The U.S. equity market is currently moving through one of its weakest seasonal periods of the year.

These are always good times to assess the health of the market and see what’s happening beneath the surface. 

One particular way to do this is by evaluating momentum.

In strong uptrends, stocks typically don't hit oversold conditions or dip below an RSI of 30. Instead, they tend to stay above the 40-50 range and frequently push into overbought territory above 70.

In downtrends, stocks usually don't reach overbought levels. Instead, they tend to oscillate no higher than the 50-60 range and often fall into oversold conditions below 30.

With that in mind, here’s a look at the percentage of...

Global equities are on a tear.

From China to Europe to Latin America, they're outperforming the U.S. so far this year.

However, while they look strong, many key indexes are approaching critical inflection points.

These three charts illustrate exactly where things stand and highlight the potential for what might come next.

If the global growth narrative is going to play out, we need to see these international indexes break higher.

Even more importantly, EEM needs to follow suit.

Under that scenario, I want to be buying a lot of these...

When it comes to the US economy it is all about the consumer.

It's the best gauge of how things are going.

The Consumer Discretionary Index $XLY does a great job illustrating this theme. 

After breaking out of a nice base in December, prices are now pulling back to that breakout level, threatening to turn into a failed move.

This zone lines up with the prior cycle highs from 2021. 

If buyers are going to step in and show up, this is where it happens. Otherwise, things could get messy.

Bulls don’t want to see this offensive sector losing steam, especially at such a critical level. If buyers don’t step up here, it raises bigger questions about risk appetite and the broader market’s ability to sustain its momentum.

Jeff Macke knows consumers better than anyone.

He just dropped some serious...

This morning, I started thinking about what still makes this a crypto bull market.

And the answer really comes down to what you’re weighing on the scale.

On one hand, the average drawdown in altcoins sits around 60% from their highs.

Charts like Ethereum and Solana look vulnerable.

Crypto stocks like Coinbase and MicroStrategy are struggling.

Meanwhile, Bitcoin is the last one standing

That’s the bulls’ only argument at this point.

Although BTC remains above a key area of underlying demand, price action has been messy—it looks like one big consolidation.

This can either be a massive distribution and a major top or just a consolidation within an ongoing uptrend.

For me, it all comes down to the VWAP from the US Election and the lower bounds of this range....

We’re halfway through Q1, and February is historically a weak month for stocks.

But here’s the key—seasonal weakness doesn’t usually kick in until the second half of the month. And that’s exactly where we are now.

In other words, if stocks struggle these next few weeks, it wouldn’t be a surprise based on historical standards. 

Maybe the market hit a rough patch, or maybe it shrugs off this seasonal trend altogether.

Either way, here’s my focus.

I’ll be watching for the groups that hold up best—the ones that stay strong even as the market chops around.

Because when the broader market wobbles, but certain areas show resilience, that’s the real relative strength signal. And that is where some of the best trading opportunities arise.

I’m ready for it.

Alfonso

As market participants, objectivity is everything as it allows us to flip the script when necessary.

That’s why I’m always on the lookout for cracks in my thesis.

One way to do that is by playing devil’s advocate, which is identifying data points that challenge our view and force us to rethink our perspective.

Adapting to new evidence isn’t just an edge; it’s a necessity to be successful in this business.

Right now, when it comes to data points that challenge a bullish case for equities, the weakness in home construction stocks stands out. 

The Home Construction ETF $ITB is breaking to new lows relative to its defensive peer group, the Real Estate ETF $IYR.

This ratio has historically acted as a leading indicator for the broader market.

You can see clear divergences where ITB/IYR tops or bottoms ahead of major turns in the S&P 500...

Health Care is one of the largest sectors in the Russell 2000, making up 17%—just behind Financials at 19% and Industrials at 17.5%. 

That makes it a key player in the small-cap space, often overlooked but packed with information.

I often use this sector to gauge where small boys are headed next.

After a brutal drawdown in 2022-2023, the Small-Cap Health Care ETF $PSCH is finally knocking on the door of a major trend reversal.

This is the same pattern we saw in major indexes and tech stocks early last year—massive bases resolving higher, marking the beginning of new bull trends.

You can see how this pattern has evolved in PSCH during this cycle.

It started with a downward-sloping 200-day moving average and a bearish momentum regime, keeping these stocks under pressure. But as buyers stepped in and demand overwhelmed supply, momentum shifted. The moving average flattened, then...

I'm in the UK visiting my sister for a couple weeks, and I have to tell you—I love it here.

The vibes, the peace, and the sense of adventure just hit different. It never gets old to visit Europe. There are so many incredible places, rich with history and culture, all packed close together.

But for me, it's hard not to think about how these European indexes are moving lately.

They’re all ripping. 

From the all-time highs in Germany and the UK to big structural trend reversals in Italy, Spain, and Greece, investors are embracing risk, and it's showing up across the board.

Unlike in the U.S., where tech dominates, these European indexes are built differently. They have a ton of financials, industrials, and even utilities. That’s just how it works here.

...