If you're bullish coming out of this Autumn's correction, then you're betting that recent lows in the indexes mark significant bottoms.

While we at All Star Charts don't believe Bulls are out of the woods just yet, we're of the view that if stocks can manage to trade in a sideways range for any length of time, that might be long term bullish for stocks and the economy in general.

With this as a backdrop, believers of the bull case should look at Walmart $WMT as a barometer of the American consumer and the willingness of investors to step in and take some risk.

Over the years I've been asked this question a lot: "What do I do? Should I sell now?"

This is often accompanied by a story about how they bought a stock or asset and it went down in price instead of up. The blame usually goes to a financial advisor or local friend who gave them "the tip". They entered into the position without a plan and now they don't know what to do with their unrealized losses.

Happy Thanksgiving!

During our family's feast this year I'll be reflecting on my gratitude to each and every one of our subscribers, and to my team here at All Star Charts. I could not ask for a more engaged audience and a more top-notch group of analysts to work with. This year marks the maiden voyage of the All Star Options corner of the All Star Charts platform and the response from institutional and retail subscribers has exceeded my expectations and it makes me ever more motivated to continue crushing it for years to come for all of you.

Sincerely, thank you.

Now let's talk business...

This week we put an options spread trade on in Goldman Sachs $GS and it serves as a vivid reminder that we're not looking for perfection here. We're looking to follow a process.

I'm on the east coast this week for the Thanksgiving holiday so I came into the city to say hi to friends. Catherine Murray and I had a nice conversation on BNN Bloomberg about US Stocks, Interest Rates and what Credit Spreads are suggesting for overall risk appetite from institutions.

Here is the video in full:

On October 30th we got more constructive on Indian stocks and put out a massive post with stocks to buy. Given that many of these trades were counter-trend in nature, we expanded on our last trade management post during this month's conference call, discussing strategies that are helpful to know in any environment.

We could not be more thrilled to see stocks selling off. There has been more than enough evidence since the beginning of October to suggest that a more neutral approach to markets and/or selling stocks short has been the best course of action. Passive investing is great, in theory, but markets like this remind everyone that hope is not a strategy. We need to weigh the evidence as it comes in and always reevaluate our thesis.

Over the past couple of years you'd have a hard time finding a bigger US Stock Market bull that me. There was no reason not to be incredibly constructive towards equities. Leaders were leading, consolidations were resolving to the upside and the trends globally were up. We didn't think it made any sense whatsoever to fight that trend, while many others did. Top callers were horribly wrong for a long time. 

From the desk of Tom Bruni @BruniCharting

While updating our Canadian Chartbooks this weekend, I noticed a few that stood out as offering well-defined opportunities where the reward/risk is skewed in our favor. This short post will outline these names and levels, but members can view all of our Canadian Universe by clicking here.

There aren't many stocks in Canada hitting all-time highs right now, but Rogers Communications is one of them. It's a leading stock in a strong sector, so as long as it's above 68.70, we want to be long with an upside objective of 95.25.

Click on chart to enlarge view.

Financials have been a weak spot in the market, with many long-term topping patterns taking place. Manulife Financial confirmed a head and shoulders top in September and is now retesting its broken neckline. We want to be selling into this strength as long as prices are below 23, with price objectives of 20 and 16.50.

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When we want to see what the market is doing on a given day, we all have our list of the ticker symbols we punch in: $DJIA or $SPY or $QQQ. Some people are more global and look at things like Gold, Crude Oil or Interest Rates and countries like Japanese or German Indexes. I talk to guys and gals who tell me the Russell2000 is the market for them. We're all different. The point is to be true to who you are and act accordingly.

I get asked a lot what that list is for me. The way I interpret this question is, “What are the 15 ticker symbols I punch into my charting software to see what the market did or is doing at any point during the day or night?”. 

From the desk of Tom Bruni @BruniCharting

We've been looking for breadth and momentum divergences to be confirmed both in the US and globally to mark the start of "the bottom" in equities as an asset class, so today I want to highlight the breadth of one sector which provides perspective on the current market environment.

I learned a long time ago from one of my early mentors, "Don't Fight Papa Dow". In other words, this is the most important index in the world. When someone asks you what the market did today, they're wondering how the Dow Jones Industrial Average closed for the session. Some people would argue that the S&P500 is more important because it represents 500 stocks, rather than just 30 from in the Dow Industrials. But by that logic, the Russell3000 should be most important because it represents 98% of all investable assets in the U.S. equities market, and contains 3000 stocks. But most non-professionals don't even know the Russell3000 exists. Also, if you overlay the Dow Jones Industrial Average over the S&P500, they move together.

If you get the Dow right, you're likely to get the direction of S&Ps right as well:

So with the Dow Jones Industrial Average reaching its upside objective this year, this is a perfectly logical place for a correction to begin. It didn't mean it necessarily had to start from these levels, but it...

Until stock markets sound the "all clear" signal and we can get back to our regularly scheduled bull market, we have to operate with a different set of rules in order to protect our capital -- both money and mind. Corrective or Bear Markets require a different set of tools. And it's not just knowing that the odds more favor short direction plays versus long direction plays, it's knowing that you have to manage open risk differently. You have to structure trades differently. And you have to operate in shorter time frames.

Down markets can be incredibly profitable for nimble traders. In fact, in my 20-year career, my most profitable years ever were 2000 and 2001 when we were on the backside of the Spring 2000 "dot com" bubble where NASDAQ dropped a dramatic 78%!! 

This is a special episode for me. James Bartelloni, CMT was one of my early mentors in the field of Technical Analysis. It's a treat to be able to have him join us on the podcast. What I like about Bart is that every time we chat, he gets me thinking about something new. He looks at the market in a different way than most market participants. His risk management techniques include sacred geometry, musical notes and lunar cycles, among others. It's always an interesting conversation with Bart, the editor of the blog BartsCharts.com. If this episode gets you thinking differently and gets you a bit out of your comfort zone, mission accomplished!