This post is a continuation of this week's Mystery Chart Reveal in which we discuss many of the big bases forming in the Energy sector.

Tuesday's Mystery Chart received similar responses, with most people looking to short the stock on a break below support.

Now, let's look at the chart and its related theme.

From the desk of Tom Bruni @BruniCharting

Tuesday's Mystery Chart is one of my favorite charts right now, so thank you all for your feedback and participation.

Everyone was on the same page here, waiting for a resolution before getting involved. Sometimes nothing is the best answer, that's why it's one of the choices.

With that as our backdrop, let's get into it.

From the desk of Tom Bruni @BruniCharting

Retail ETF XRT is at an interesting level, so in this post we're gonna take a look at its chart and what the internals are suggesting for the sector in the weeks/months ahead.

This could be a major top in the US Stock Market. It could be a historic top like 2007 or 1929, maybe even 1987. This is certainly a possible outcome.

Something else to consider is that betting on these outcomes is rarely a profitable endeavor. They make movies about the heroes who bet heavily on the financial collapse of 2008 and made fortunes. We talk about these fund managers like legends. What they don't make movies about are the infinite number of investors over the years who have bet on such outcomes, and were wrong instead. I guess Hollywood doesn't think those stories will sell.

I understand the bearish thesis for US Stocks. In fact, we always take the other side of our opinions and try to poke wholes in a given theme. We've been in the camp that since most stocks have gone down to sideways over the past 19 months, this is a classic cyclical bear market. It has gone on through both price and time, not just one of the two. I don't care how you slice it, this was a bear market, and possibly still is.

Yesterday we discussed the major indices in India and how the weight of the evidence is beginning to suggest we're close to a tradeable low.

In today's post, I want to outline two "trash to treasure" trade setups that are low probability in nature but offer a ridiculously skewed reward/risk at current levels.

If you haven't read our past posts on identifying counter-trend trades and managing them, we'd highly recommend doing so before continuing.

In this Episode of Allstarcharts Weekly, Steve and I talk the relative performance of stocks. When assets are in strong uptrends, they not only perform on an absolute basis, but they tend to outperform their alternatives. With new highs in the S&P500 last month, we've seen nothing but lower highs relative to both Gold and US Treasury Bonds. In fact, on a relative basis, the S&P500 is actually down to its late December 2018 lows. Will they hold or confirm a massive distributive top? I think the resolution will tell us a lot about the strength of the current stock market.

When I go through my charts, I see all kinds of different trends, patterns and consolidations around the world. It really depends on what I'm looking at. However, one area that has been a consistent outperformer is in Medical Device stocks. The way I see it, these are just Tech stocks stuck in the bodies of Healthcare names. So our theme of "bullish tech" makes sense, even though on paper they're Healthcare stocks. 

Here is a chart of the Medical Device & Equipment Index $IHI relative to the S&P500. This one goes from the lower left to the upper right. We call those Uptrends:

The major indices in India are stuck in "no man's land" right now, making it a tough trading environment for many.

In this post, we're going to take a quick look at what that means and how we're approaching it.

From the desk of Tom Bruni @BruniCharting

Tuesday's Mystery Chart is one of my favorite charts right now, so thank you all for your feedback and participation.

Almost every one of you said you were selling the stock in question as it put in a failed breakout, while a handful of you were doing nothing and buying the subsequent breakout with me.

With that as our backdrop, let's get into it.

Assets in the strongest uptrends not only do well on an absolute basis, they tend to outperform relative to their alternatives as well. In the case of the S&P500, with new all-time highs last month, we've just seen lower highs relative to both Gold and US Treasury Bonds. This is NOT evidence of a strong uptrend.

The question today seems clear to me: Is the underperformance of stocks relative to other assets "The Divergence" that we'll point to in the future as the heads up that something was changing? Or will we get relative rotation back into equities and this was just a temporary blip while stocks consolidated their massive 2016-2017 gains?

In this Episode of Allstarcharts Weekly, Steve and I talk about US Small-caps and the underperformance we've seen out of anything non-large-cap since 2018. We are now down to levels not seen since early 2016 when Small-caps started their outperformance vs Large-caps, which is where stocks bottomed after the 2015 cyclical bear market. Is this where the turn begins? Let's walk through it together and see if we can figure it out!