Earlier this week we discussed an indicator that uses the 200-day moving average to help identify a sustainable low in Indian Equities.

Today, we've got another indicator we're watching closely. Something we call the Breadth of Momentum measure here at All Star Charts.

Yesterday we published a post titled "The Reality Regarding Real Estate" in which we pointed out the long-term underperformance of REITs as a sector. And although we see no signs of this trend reversing any time soon, when we dug into the space we couldn't help but notice a select group of stocks outperforming not just Real Estate, but the broader market as well.

In this post, we will illustrate the relentless strength from this niche group of Data-Center and Cell-Tower REITs and offer two trade ideas in the space.

We also wrote a post lately in which we filtered the S&P 500 down to just 32 of its strongest performers based on a variety of metrics. Despite the weakness from Real Estate as a whole, five of the stocks on that list are actually components in our All Star Charts Custom Data-Center & Cell-Tower REIT Index.

From the desk of Steve Strazza @Sstrazza

Thanks to everyone for participating in this week’s Mystery Chart. The vast majority of respondents were either sellers or wanted nothing to do with this messy mess of a chart. Some of our less risk-averse participants were willing to bet on a failed breakdown and buy a reversal back above the recent lows.

In our opinion, this is the definition of a structural downtrend and there is very little evidence to suggest that will change anytime soon. With that as our backdrop let's discuss why this chart is on our radar right now.

This is a weekly line chart of Real Estate (IYR) vs the S&P 500 (SPY) looking back about 20-years.

From the desk of Steve Strazza @Sstrazza

In our Table Of The Week, we highlighted some of the strongest stocks in the S&P 500 right now. We showed statistical evidence that these stocks have not only performed better over the long-run, but they've also suffered smaller drawdowns in the near-term.

Despite remaining skeptical of what is still a bear market rally in our opinion, there are always opportunities on the long side, we just need to pick our spots carefully and respect our risk management levels. In this post, we're going to outline trade setups in what we believe are some of the most robust uptrends still in place.

If the market moves higher from here, these stocks should continue to exhibit leadership. If it rolls over, they should hold up better than the average stock and our risk will be well-defined to ensure minimal losses in the case we're wrong.

From the desk of Steve Strazza @Sstrazza

If you read our research regularly you may be sick of this by now, so my apologies. But there is a method to our madness. A tried and true repeatable process that allows us to consistently identify the strongest and weakest areas of the market. Any market. While we've focused mainly on US Equities recently, we can apply these same principles to any asset class.

We have continually highlighted the fact that the long-term outperformers are often also the short-term leaders. Why? Because there is empirical evidence to support this and we know it works. I'll be writing an educational post about this soon.

We've also written a lot lately about how one of the main signals we're looking for before turning bullish on stocks is for the percent of NYSE components to break back above 15%. Well, we're still not really close, but with such drastic daily swings in the major indexes, this could change fast so we want to be ready if and when it does.

Earlier this week, I put out a note about what I've been telling friends and family when they come asking. It comes with the territory right? I'm sure many of you are being sought after in similar ways. It makes sense for this environment.

But the truth is, I underestimated just how much this post would resonate with people. So much so, that I figured I'd write a follow up about another popular, yet simple strategy that I learned a long time ago.

To recap, what the Family & Friends post was about, was the percentage of stocks on the NYSE above their 200 day moving average. Historically, it's when we're above 15% and rising that it makes the most sense to own stocks. When we're below that, it's further evidence that stocks are a mess.

Long-term Equity charts and breadth measures continue to suggest a defensive approach towards stocks remains appropriate.

With that said, if you're a trader taking advantage of this volatility then the following charts are those we'd watch to determine if the recent bounce can continue.

We're in that part of the cycle where friends from high school are calling me to ask about the market and family members I've never spoken to about the markets are now interested. It's funny what a little volatility can do to peak people's interests.

Anyway, these calls are coming early and often. Many of you in a similar position to me are probably having the same experience.

Today, I thought I'd just write a quick post about what I'm telling my loved ones when they ask.

First of all, I definitely stress that not having a plan is the first problem. This shouldn't be the time to try and figure out what to do. This is when stress levels are elevated and when we're most vulnerable to make irrational decisions. I try to remind them of this, but they don't care. They never do.

So moving on, the old, "JC, when do I buy stocks?" question keeps coming back. It's fair. Everyone wants to know.

We've been talking a lot about our expectations for continued volatility and what conditions we'd need to be bullish stocks again.

In this post, we want to step back and see what some of the longer-term weekly and monthly charts are suggesting for stocks and the other major asset classes.

Here's the Nifty 50 which spent the last two years grinding slightly higher as momentum diverged negatively. So far this year, prices have fallen 40% and retraced 38.2% of their entire 2001-2019 rally...in three months. From a risk management perspective, bulls need to see 8,000 hold in the Nifty 50 or there is further downside risk towards 6,200.

Click on chart to enlarge view. 

Last week we outlined why the risk remains elevated in stocks and updated our forecast for continued volatility.

When markets go through periods of elevated volatility/stress, many market participants look to catch the exact bottom, but a better approach in our view is to buy on the way back up!

The trend for stocks is down. When they do rally, they scream dead-cat bounce. And bonds keep going out at new all-time highs every week. Gold is at its highest prices in 7 years and Interest rates are in free-fall along with bank stocks. What type of environment does this appear like to you? Is it the kind of market where we want to be buying stocks aggressively, or is this the type of market where we want to be smaller, cash heavy and more defensive?

Let's try to figure it out together.

First of all, Industrials historically have the highest correlation with the S&P500 of all the S&P Sectors. This is what that group currently looks like. One of our most basic technical principles is that former support turns into resistance. We call that Polarity. You can see this taking place in this sector index:

From the desk of Steve Strazza @Sstrazza

Every weekend we publish simple performance tables for a variety of different asset classes and categories along with brief commentary on each.

As this is something we do internally on a daily basis, we believe sharing it with clients will add value and help them better understand our top-down approach. We use these tables to provide insight into both relative strength and market internals.

This week we want to highlight our US Equity Index and Sector tables, as they are both showing continued evidence to support some of the trends we've discussed recently.

Click on table to enlarge view.