Chris Ciovacco is someone whose work I've followed for many years. His approach to markets is similar to mine, in that he incorporates a weight-of-the-evidence technical strategy. His open-mindedness and ability to set up multiple outcomes to prepare for, is one to be admired. In this episode, Chris walks through his thought process when analyzing the current environment. He makes a great comparison to early 2009 and asks whether we're in January '09, just before another severe decline in stocks, or in May, on the way up after already bottoming.

This is a great episode that I hope makes you think differently and inspires you to keep an open mind and come up with your own possible scenarios for the coming months and quarters. This was a fun one...

If you are caught between a rock and a hard place, you are in a difficult situation where you have to choose between two equally unpleasant courses of action.

In many Indian stocks that is exactly where many market participants find themselves.

Let's take a look at why.

Interest Rates continue to stabilize in the US and globally, setting the stage for rotation into several beaten-down areas of the Equity market...particularly in small banks.

This was a risk to our near-term bearish thesis and suggests the major indexes could push marginally higher in the very short-term. And while we ultimately believe further weakness is ahead over the intermediate-term, we have to acknowledge and monitor this rotation under the surface to see how it develops.

Several stocks we're watching could benefit from this "dash for trash" trading environment taking place in the market. Not only are they attractive reward/risk opportunities on their own, but more importantly, how they perform will provide important information about risk appetite and the potential for the market to extend further to the upside. It's the same reason we were monitoring Autos and Media earlier in the month.

The idea is that if market participants are buying these very beaten-up stocks, then the world is...

The Nifty IT Index remains subdued due to weakness in its largest components, like Tata Consultancy, but under the surface, there's been leaders like Info Edge (Naukri) trending well on an absolute or relative basis.

With that said, several charts are suggesting this leader may be transitioning into a laggard.

Let's take a look at the chart that sparked this thesis.

Below is a weekly chart of Info Edge (Naukri) relative to the Nifty Next 50. Since its breakout to new all-time highs in early 2014, we've seen the Fibonacci Extensions from its 2008-2009 base serve as solid support/resistance levels. Recently, prices hit our fourth upside objective at the 423.6% extension near 0.1056 and have not exceeded it yet.

Click on chart to enlarge view. 

This also comes as momentum diverges negatively from price by making lower highs as prices make higher...

Did you notice how Stocks, Bonds and Gold are all at or near 34-day highs?

Here is an update to our Bull Market Checklist of 20 Items.

*Note: The Sensitivity column represents how close the asset is to the risk level in question

From the desk of Steve Strazza @Sstrazza

For the week ended Friday, April 24, 2020:

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

This week we want to highlight the continued divergence between Energy stocks and Oil using our Sector and Industry ETF and Commodity tables.

First, let's look at some of the longer-term leaders. Biotechs (IBB) just broke out to fresh multi-year highs and are one of the top performers on our Industry ETF list across all timeframes.

Aside from Gold Miners (GDX), they are the only industry on our expanded list of over 50 ETFs already back at fresh 52-week highs. Definitely some relative strength worth paying attention to in these areas.

Be sure to read our recent post on Gold Miners.

This week we saw a huge gain from not only the strongest Industry ETF over the trailing year (GDX) but also the weakest, as...

The Nifty Financial Services Index continues to show relative weakness.

In this post, we're going to update our risk management levels, targets, and discuss the components within the index that are showing the most relative strength and weakness.

From the desk of Steve Strazza @Sstrazza

We have been writing a lot about risk-appetite lately as we're constantly trying to gauge the "animal spirits" at work in the markets.  Right now we're seeing a lack of participation from risk-assets such as Small-Caps, Commodities, and the more cyclical sectors as well as a risk-off theme in many of our intermarket ratios.

We've covered the US plenty already, so this post will focus on what we're seeing from risk-assets in Equity Markets abroad.

This week's Mystery Chart was an inverted chart of the Frontier Markets ETF (FM). Thanks to everyone for participating. You were pretty much ALL buyers this week, which means you were actually selling Frontier Markets against their prior all-time lows.

From the desk of Steve Strazza @Sstrazza

Yesterday I wrote a post about deteriorating market internals. I discussed breadth divergences as well as the lack of confirmation of the S&P 500's recent highs from many important sectors and indexes.

In this post, we're going to focus specifically on the Large-Cap Sector SPDRs that failed to make higher highs and are showing early signs of cracking. To no surprise, these are some of the most cyclical areas of the market including Industrials (XLI), Financials (XLF), Materials (XLB), and Energy (XLE).

This speaks to the lack of risk-appetite we continue to see not only within equities but across all asset classes right now.

You can see the first three sectors in the chart below. With Crude Oil futures crashing below zero this week, we think it's prudent to stay away from the Energy sector until the smoke clears.

Click on chart to...

Reliance Industries is in the news this week due to an investment from Facebook in JioMart.

Regardless of the fundamental merits or impact of this deal, let's analyze the charts and see how the market's digesting this information.

From the desk of Steve Strazza @Sstrazza

We don’t need to dig too far into the internals to know breadth has been deteriorating since last week even as the S&P 500 was making new incremental highs. Most large-cap sectors failed to make new highs with the S&P as well as many other major indexes, including small-caps, mid-caps, and Transports.

We’ll talk about this more below. First, here is a new breadth indicator we’re looking at using the Anchored Volume Weighted Average Price (AVWAP).