From the desk of Tom Bruni @BruniCharting

I just finished writing a free post for All Star Charts India following up on where we've been over the last two months and what this last week of price action means for Indian stocks in the near-term.

As I was writing up the post I noticed a lot of similarities between US Stocks today and where India was just a few weeks ago.

I'm going to summarize the key points, but I'd encourage you to read that post in full so you can really see what I'm talking about below.

Anyway, let's just jump into it.

In our April 10th Chart of The Week, as well as in our Member's Only Conference Call on Thursday, we presented the question of whether the bearish momentum divergences we were seeing in the Nifty 50 and other major indexes would matter or if the market would brush them off and continue higher.

Well, we finally got our answer.

What inflation?

This seems to be the talk of the town these days.

Interest rates all over the world made new lows last month and have since then tried to start a recovery. We're seeing this across the developed world in the U.S., Germany, UK and Japan, among others. Meanwhile, journalists at Bloomberg Business Week decided to put a dead dinosaur on the cover of the latest issue asking, "Is Inflation Dead?"

During yesterday's Members-Only Conference Call we outlined a trade idea that falls into the low probability, high reward/risk category.

In this post I want to share that idea and explain why it's the type of trade we'll take every day of the week.

From the desk of Tom Bruni @BruniCharting

I received a ton of great responses via Twitter and email for this week's Mystery Chart, so thank you for that.

A lot of you were leaning towards the short side, with different approaches and stops. Some were neutral, but very few of you were leaning long.

A big theme for me this year has been the US Dollar and how it will impact stocks as an asset class. The thought process coming into 2019 was simple. The Dollar had rallied throughout 2018 to reach some pretty critical levels. The idea was that if the Dollar was going to rip right through there, it was more than likely happening in an environment where investors would be fleeing to safety. That's the type of market where stocks are selling off. The opposite of that argument was that if the Dollar was not breaking out, that stocks would likely be doing well, both in the U.S. and more importantly globally.

Fast forward to today, almost 1/3 of the way done with the year, and stock have performed very well. In fact, as Piper Jaffray's Craig Johnson mentioned in this week's podcast, stocks have had an incredible entire year already, just a few...

This week on the podcast we have the pleasure of chatting with Craig Johnson, Chief Market Technician at Piper Jaffray. I've known Craig for a long time and love the work that he puts out. During the day he speaks to buy side clients all over the world. As a past president of the CMT Association, he has surrounded himself with some of the best minds in the history of technical analysis. His perspective based on who he speaks to and his experiences throughout his career make me want to listen when he has something to say. In this conversation we discuss the rest of the year for U.S. stocks and sectors. There's a part in this episode that focuses on breadth and what we're both looking for moving forward. Inflation, or lack thereof, is something he's watching, so we talk about Gold, Oil and other inflationary factors that could impact stocks and bonds. We covered a lot. I really enjoyed this one!

Most of the Equally-Weighted Sector Indexes we track have been underperforming their Cap-Weighted counterparts for the last 16 months, however, we are starting to see some signs that a counter-trend rally in three sectors may be brewing.

From the desk of Tom Bruni @BruniCharting

Last week's Mystery Chart Reveal focused on the rotation into Industrial stocks. In this post I'm going to point out five names in this sector from the S&P 1500 with extremely well-defined risk and skewed reward/risk at current levels.

The Dow Jones Industrial Average is my favorite of all of the stock market indexes. You know how many charts we look at every week at our shop. So with the plethora of price data that comes across my desk, it's really the simplicity of the 30 stocks that represent the Dow that makes me appreciate the index for what it is.

The Dow is a price weighted index where the highest priced stocks represent a larger portion of the index. For this reason, it often gets dismissed in favor of the "broader-based", market cap-weighted S&P500. Some like myself even prefer the Russell3000 index which is really representative of the US Stock market. Funny enough, as different as these indexes may be on paper, that's why they play the game. Here are what the 3 of these things look like in real life. 

Most of the stocks we've liked on the long side have either been stopped out or are well on their way to our upside objectives. While we're remaining patient and think many stocks still need to consolidate their recent gains, that doesn't mean there aren't any opportunities right now.

In this post I'm going to outline the stocks where our risk is very well-defined and reward/risk is skewed in our favor. That way we can participate in any potential upside if the market continues higher, while also limiting our downside should it succumb to the near-term weakness we've been on watch for.