Did you see Consumer Staples go out at new multi-year relative highs yesterday? The strength is in Staples, not in Banks or Industrials, for example, which keep making new relative lows.

So why should we care?

"JC, no one cares about staples, why does this matter?"

Well, as it turns out, Consumer Staples relative strength is one of the most reliable indicators of market strength and weakness that exists. You see, when stocks are doing well, Consumer Staples tend to underperform the rest of the market. When stocks are doing poorly, Staples are the leaders.

Think about it. No matter how bad the economy gets, we're still going to brush our teeth, wash our dishes, smoke cigarettes and drink beer right? As a society, I mean. Well, those are consumer staples. This is the group of stocks that outperforms as stocks fall, which makes perfect sense.

Here is the chart of Staples breaking out to new multi-year highs relative to S&Ps:

From the desk of Steve Strazza @Sstrazza

As always, thanks to everyone for participating in this week's Mystery Chart. Almost all respondents were buyers. A few also mentioned they would only want to be long against potential support at the prior lows which is likely the same approach we'd be taking with a long-term timeframe.

Something we've hit on a lot lately which was also a common theme among the Technicians that presented at Chart Summit 2020 last weekend, is that the relative trends that have been in place have more or less remained in place throughout the recent volatility. Check out this week's podcast episode where JC and I discuss this and other key themes from the conference.

Chart Summit 2020 is officially in the books. What an amazing time we had. Wow!

The videos of all the presentations are now up and you can go to ChartSummit.com and stream them for FREE!

From the desk of Tom Bruni @BruniCharting

Last week we talked about some of the positives in the market...Copper holdings its low, Tech leadership, etc.

This week we're taking a look at why this rally is likely a dead cat bounce with some stats.

In this post, we're going to outline the inter-market signals we're watching for stocks next move...and why they suggest it's likely lower.

From the desk of Steve Strazza @Sstrazza

The market rallied almost 20% in just three days after making new lows last Monday. Stocks recently sold off in record fashion so it's no surprise to see them bounce with the same ferocity. But with the VIX still elevated above 50, we're not out of the woods yet and should expect the swift moves in each direction to continue for now.

Some say we're in a new bull market, but the charts tell us we're actually at a logical level for what appears to be no more than a bear market rally to stop and reverse.

Last week we outlined why 170 in the Nasdaq 100 ETF (QQQ) was such an important level of interest if buyers were going to take control of stocks in the near term. Now that they have, we're looking for sellers to reassert themselves at current levels, which we wrote about yesterday.

If you're one of these people who thinks the lows for stocks are in, which sectors would you expect to be leading the way higher? The big important groups that fell the hardest, and therefore should bounce the most? Probably.

Well, what if I told you that it's been the opposite.

The leaders off the lows are Utilities, Consumer Staples, Healthcare and REITs:

In our market view update, we outlined how we're approaching stocks after catching last week's 20% rally in the Nifty 50.

In this post, we want to share an intermarket signal that's suggesting a defensive posture remains best when approaching stocks as an asset class.

Last week we looked for a counter-trend rally in stocks and we got it. The Nifty 50 rallied 20% from its intra-week low to its intra-week high, leaving a lot market participants asking if Indian stocks are out of the woods.

In this post, we're outlining why our defensive stance remains and how we're approaching the weeks ahead.

From the desk of Steve Strazza @Sstrazza

This week's Mystery Chart exercise gives us a nice glimpse into the current sentiment amid the recent volatility, so thanks to all those who responded. The overwhelming majority of you we're either selling or doing nothing, which comes as little surprise.

Many of you wanted to sell this chart aggressively and even cited the current market environment as part of you're reasoning. But! The chart was inverted... so all those who were pounding the table to short it were actually buying the Nasdaq 100 (QQQ) relative to the Russell 3000 (IWV).

I'm curious to see how, if at all, this changes your perspective on the chart. Tweet me @sstrazza with your thoughts!

From the desk of Steve Strazza @Sstrazza

In a post earlier this month, we scanned the S&P 500 for the strongest uptrends so that we'd be prepared to buy stocks when the market stabilized. Well three weeks and an additional 25% drawdown later, and we're going to do a similar exercise.

The last two days' rally in stocks confirmed bullish breadth divergences which suggest a tradeable bottom is near and put the S&P 500 back above its 2018 lows around 2350, giving us a well-defined level to manage risk against. If prices fail to hold this level, all bets are off, but as long as we're above it, we think the bias is to the upside over the coming weeks to months. As such, we're looking for long opportunities that offer asymmetric risk/reward setups in the strongest stocks, three of which we outline below.

From the desk of Steve Strazza @Sstrazza

We are constantly analyzing market breadth. We do this not just for insight into the strength of the current trend but also because it helps us identify key turning points. We outlined a variety of deteriorating breadth measures in a post last month to support our bearish outlook on stocks, and the signal turned out to be quite timely as the market collapsed soon after.

With the market now severely oversold amid one of the swiftest bear markets in history, we're looking to breadth measures once again for signs of a tradeable low.

This week we've outlined what we need to see from breadth, the Nifty 50 & Bank Index, and Copper in order to get long Indian stocks from any sort of intermediate or long-term perspective.

Although we've not seen those developments yet, US Stocks (S&P 500) is back above its December lows and other foreign indexes have started to catch a bid in the near-term. This subtle improvement is suggesting some trade opportunities could develop on the long side for those who hold positions for a few days to a week or two.