We talk a lot about the importance of secular leaders. More often than not these groups have a relationship to Technology, regardless of whether they are classified as a Technology stock or not. Tech is everywhere today.
The last time a sector was so pervasive would have to be Industrials way back in the mid-1900's. One could argue Financials had their time in the sun too, but that was short-lived and we all remember how it ended.
Industrials may not be as important as they once were, but they are still important.
In mid-April, we posted a list of 20 key chart levels we were monitoring in some of the most important assets around the world. We've used this as a risk-gauge to measure the internal strength or weakness of the market in the time since.
The list started at 60% bullish, never fell below 50%, and has been stuck at 90% with the same two bearish hold-outs for the past month now. The list has grown consistently more bullish since we began tracking it as more charts continued to break above our levels.
Since the end of May, 18 of the 20 items have been in bullish territory and many have run a good amount from our risk-levels. With the strongest stocks and indexes making new all-time highs and confirming this bullish outlook, prices have spoken and it's time we retire our bull market checklist.
For those new to the exercise, we take a chart of interest and remove the x/y-axes and any other labels that would help identify it. The chart can be any security in any asset class on any timeframe on an absolute or relative basis. Maybe it’s a custom index or inverted, who knows!
We do all this to put aside the biases we have associated with this specific security/the market and come to a conclusion based solely on price.
You can guess what it is if you must, but the real value comes from sharing what you would do right now. Buy, Sell, or Do Nothing?
Every week we publish performance tables for a variety of different asset classes and categories along with commentary on each.
Last week was a big one for the bears as most risk-assets sold off aggressively to end the week after a strong start.
Many major Indexes in both International and Domestic Equity Markets printed bearish island reversal patterns, most of which occurred at logical levels of overhead supply. Read our post about it here.
We also just wrote about how the market's secular leaders are holding up best since market internals peaked about two weeks ago. We're going to use our US Index and Sector tables below to highlight the noteworthy relative strength from these areas amid the recent market weakness.
Let's take it from the top and begin with our US Index ETF table.
It's been a close your eyes and buy anything market, particularly the past few weeks as even the most hard-hit areas experienced monster rallies. That appears to be changing this week with the biggest 1-day down move in the S&P since mid-March as well as the largest single-day spike in volatility since February 2018.
Last week we highlighted the healthy rotation into cyclicals. We pointed out that the secular laggards and areas that had suffered serious structural damage were now outperforming, and by quite a wide margin.
We used this scatter plot of our Dow Jones Industry universe to illustrate this price action.
We’ve written extensively about the split market we’ve been in for the better part of the year, as the same leaders coming into the Q1 crash emerged as the strongest areas coming out of it. Over the past 3-4 weeks we’ve seen some major mean reversion and much-needed participation from the cyclical sectors which have been lagging for years now.
This is constructive rotation and a major positive for bulls as we’re going to need to see this type of breadth expansion if this rally is to have legs.
While this is an encouraging development, there’s one thing that hasn’t changed at all. With all the focus on Financials, Industrials and Energy recently, Tech seems to have been forgotten a bit, but it’s still by far the best game in town.
From the desks of Steve Strazza @Sstrazza and Tom Bruni @BruniCharting
In this post, we're going to share 10 of the most important charts we're looking at right now. Some are merely for observational purposes or to highlight some of the broader trends at play in the markets while others are trade ideas in some of our favorite names and areas.
In this post, we'll highlight that this broadening participation and flight towards risk-assets is more than just a one-week phenomenon. We've seen this type of price behavior in some asset classes for over a month now.
In recent weeks, we've witnessed a powerful rotation as many of the secular laggards have assumed short-term leadership positions.
In today's post, we're going to take a stab at using a new visualization tool in order to illustrate this recent changing of the guard.
This scatter plot is comparing the maximum drawdown from 52-week highs to the March lows (Y-Axis) with the short-term performance off of the May 13th low, among all of the 150+ Dow Jones Industry Indexes. The plot-sizes are based on how large the current drawdown is... In other words, the bigger the dot, the bigger the drop.
Thanks to everyone for participating in this week's Mystery Chart. It was a bit of a layup, as most of you were bullish, recognizing the powerful failed breakdown and follow-through back above critical former support.
We would agree and like this chart for a counter-trend move right now as well. But the reason we chose it was really for informational purposes, as we are seeing continuation patterns resolve higher all over the globe right now.
The more of these patterns that resolve to the upside, the stronger the weight of the evidence builds in favor of other consolidations working themselves out higher as well. We are seeing this across all areas of Domestic and International Equity Markets, many of which we'll highlight in this post.
For those new to the exercise, we take a chart of interest and remove the x/y-axes and any other labels that would help identify it. The chart can be any security in any asset class on any timeframe on an absolute or relative basis. Maybe it’s a custom index or inverted, who knows!
We do all this to put aside the biases we have associated with this specific security/the market and come to a conclusion based solely on price.
You can guess what it is if you must, but the real value comes from sharing what you would do right now. Buy, Sell, or Do Nothing?
Every weekend we publish performance tables for a variety of different asset classes and categories along with commentary on each.
This was a special week as Friday marked the end of May which means fresh monthly candlestick data. Analyzing these long-term monthly charts every several weeks is a great exercise as it forces us to take a step back and identify the structural trends that are in place.
As such, this week’s theme is the continued outperformance over both the short and long-term from those areas sporting the strongest primary uptrends.
Tech $XLK is by far the best performing sector over the trailing year. It is also the 2nd best over the past month and quarter, behind Communications $XLC and Health Care $XLV, respectively. Not surprisingly, these same sectors are also the next best performers over the trailing year.
