From the desk of Tom Bruni @BruniCharting

If you've been reading our content over these last few weeks, you've likely noticed we've been performing a lot of deep dives on the sectors we want to be involved in on the long side like Solar, Energy (premium), Retail, and Software (premium). Healthcare in general has been a laggard and the Medical Device space continues to lead, but now we're seeing Biotechnology start to break out as well. In this post we're focused on the equal-weighted Biotech ETF $XBI, as the cap-weighted $IBB is lagging significantly and remains weak. This out-performance by the equal-weight sector ETF signifies a broad-based rally is underway, so we're looking for the best names in the sector to take advantage of this theme.

From the desk of Tom Bruni @BruniCharting

It's been a rainy week here in New York, however, the Solar sector ETF $TAN was a bright spot as it broke out of a 2.5-year base. As a result, we've done a deep dive into the sector to identify several names that look to be offering asymmetric reward/risk opportunities on the long side.

Excuse the pun, it was too easy.

Everybody loves a deal. And that couldn't be more obvious after looking at a monthly chart of Costco $COST going back to the financial crisis that bottomed out in 2009. Shoppers clearly have been filling Costco parking lots and their carts, as the monthly chart has been a beautiful uptrend with very little volatility.

From the desk of Tom Bruni

I know you're probably tired of hearing this intro over and over again, but to start this post I want to reaffirm that at Allstarcharts we remain in the camp that stocks in the U.S. and globally are headed higher. Normally we focus on the sectors that are leading and making new all-time highs, however, the Oil & Gas Exploration & Production ETF $XOP is breaking out of a multi-year consolidation, signaling a new intermediate or long-term uptrend is beginning. As a result, we want to see which names in this space present the best reward/risk scenarios to take advantage of this thesis.

Last summer I wrote a pretty controversial post about the fact that everyone just assumed retailers were all going bankrupt and buying their stocks was foolish. My argument at the time was the exact opposite: I felt that to not be buying retail stocks was irresponsible. Here is that post titled, "Is This Really The End Of Retail As We Know It?". There many stocks at the time that presented us with well defined risk with rewards exponentially greater than any risk we were taking. That worked out very well for us.

At this point, we're still hearing this short retail narrative from stock market bears digging for anything they can think of to not admit they were very wrong. You see, that's the difference between people who make money and those who don't: the ability to change your mind. Remember, we're not here to be right, we're here to make money. Check your ego at the door or this market is going to rip your face off, as it has done to many retail bears.

Stocks in the United States aren't up because of what is happening in New York or Washington DC. They are up despite of what is going on in those places. Stocks in the U.S. are up because stocks all over the world are up. That's how this works.

So when we are trying to figure out whether the next move in stocks is higher or lower, and whether we should be buying them or selling them, we don't just want to look within U.S. borders. By doing that we're missing the bigger picture. We care less about the behavior of stocks in our own country and more about stocks as an asset class.

I am a firm believer that the Stock Market, U.S. or otherwise, is in an uptrend that began in early 2016, or summer of 2016. You can buy me beers one day and we'll discuss less relevant data points, like this 6 month difference, that dorks like me enjoy arguing about over beers. The point is, however, that this is a new bull market, not a 9-year old one like some people like to tell you.

So if we're in a bull market, then consolidations within this uptrend should resolve in the direction of the underlying trend, which is up in our opinion. The first industry group to break out from this consolidation the past couple of months and make new highs is Software. It's a major standout guys and we need to pay attention. So here's a breakdown of the sector components and which ones we want to be buying right now.

From the desk of Tom Bruni

Since the market's volatility picked up in late January, one key piece of the bear thesis has been weakness in Technology, yet we've not seen a crack and flush lower. I don't know about you, but I was promised a "Tech Wreck" and will not leave until we get one or Mr. Market provides me a refund.

Okay I'm being facetious, but in this post I want to outline what I'm watching and explore what the implications are if the potential bearish patterns in this sector don't pan out.

From the desk of Tom Bruni

Many have fixated their attention on the "triangle pattern" that's formed the NYSE Composite Index and other major US indices.  This pattern is a visual representation of the indecision between buyers and sellers in the market, and its resolution typically leads to a significant move in the direction of its breakout.  In times like this where the index itself has little directional conviction, a study of the components may offer some insight into which way the market resolves.

It's hard for a mechanic to tell you what's wrong with your car without lifting the hood to see what's inside. In the stock market it's no different. We often hear people giving a diagnoses of the market's health simply by using the S&P500 or some other popular index. To me, that's irresponsible. This is not a stock market, it's a "market of stocks". There are 500 stocks in the S&P500. The market is not a thing, it's a lot of things.

Sector rotation is the lifeblood of any bull market. Some sectors are indicators of risk appetite while others point to risk aversion. Consumer Discretionary stocks include companies where we spend our discretionary income: retailers, homebuilders and autos for example. Consumer Staples, on the other hand, consist of companies that consumers would use regardless of whether times are good or bad. No matter how the economy is doing, we're still going to drink beer, smoke cigarettes, brush our teeth, wash our dishes and clean our clothes. These types of companies are the Staples.

From the Desk of Tom Bruni

This past Wednesday I had the privilege of joining 7 world-class Market Technicians in the Stocktoberfest East Chart Battle Competition. It was a lot of fun to share my work with the 450+ conference attendees and surreal to share the stage with people I've learned from since day one of learning Technical Analysis. With that being said, I was knocked out in the second round by Charlie Bilello so I'm writing this post to show all three of my ideas in their entirety.

This is the most valuable analysis I do every month. When you sit there with some music on and just rip through monthly charts, it really gives you perspective. We're taking a step back and reanalyzing the trends. It's easy to get caught in the day-to-day noise. This exercise helps avoid getting whipped around. I encourage everyone to make their own list of Monthly Candles.