From the desk of Tom Bruni @BruniCharting

From a Precious Metals' perspective, Palladium has been a clear leader for over a decade. Despite its strong long-term performance, a sharp March drawdown has people wondering whether this is the end of  its reign over the Precious Metals' space.

In this post, we're going to outline our "keep it simple stupid" approach to answering that very question.

Let's jump into it.

From the desk of Steve Strazza @Sstrazza

For the week ended Friday, June 5, 2020:

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

This was a big week for market bulls as a myriad of consolidations resolved to the upside while the powerhouse Nasdaq 100 $QQQ finally became the first major index to reclaim its all-time highs. The only assets to post negative returns this week were the usual "safe-havens" such as Treasuries, Yen, and Precious Metals. Everything else was green. How's that for improving risk-appetite?

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...

Do you know when stocks making new 52-week relative lows is actually bullish? When we're talking about Consumer Staples.

You see, when the market is falling apart, you're going to see a sympathy bid, specifically on a relative basis, into Consumer Staples. In other words, no matter how bad things get, we're still going to drink beers, smoke cigarettes, brush our teeth and wash our dishes. Those things won't change. We call them Staples.

On the flip side, when stocks are doing well and the major indexes are in uptrends, or bull markets if you want to call them that, Staples are going to underperform. Their safer-haven status and lower beta components tend to lag during the good times.

You can see that here:

Here's a trade I like a lot right now.

It's in the right sector. The trend is in the right direction. And Momentum is confirming it all.

From the desk of Steve Strazza @Sstrazza

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.

From the desk of Steve Strazza @Sstrazza

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.

From the desk of Tom Bruni @BruniCharting

Today I want to follow up on JC's post about the direction in which consolidations are resolving, specifically as it relates to Yen/Bonds/Gold and other intermarket risk barometers in our toolbelt.

Let's take a look at the charts and see what conclusions we can draw and what questions we can ask about the future.

From the desk of Steve Strazza @Sstrazza

New Mystery Chart!

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?

Consolidations tend to resolve in the direction of the underlying trend. But when they don't, that's the signal!

An oldie but goodie from the past, that I always think about when this comes up, is the US Treasury Bond Fund back in the Fall of 2016. I remember chatting with Liz Claman at the time about it on FOX. The $TLT was consolidating in a classic, textbook continuation pattern above former resistance from the early 2015 highs:

The bet we were making (for many other factors as well at that time) was that this was not a continuation pattern, and instead a massive failed breakout.

Today I want to talk about how important it is to know what's inside the index funds you own. In many cases they can be misleading. Something like the Dollar Index, for example, which is basically 60% Euro, is not exactly the best barometer of the "U.S. Dollar". The Consumer Discretionary Index is 23% Amazon. Stocks like Google and Facebook aren't even in the Technology Index! Combined, $GOOG & $FB actually make up around 40% of the Communications Index.

It's important to know what you own, or what you're analyzing for that matter. When you talk about the S&P500, this is basically they greatest momentum strategy of all time. It buys more of the biggest and best performing stocks and kicks out the worst ones, replacing them with better performers. For me, this is the best large-cap momentum strategy ever created.