Last week's Chart of The Week discussed the "One More High" type setup we often see  prior to price consolidations or pullbacks, providing some context around why we continue to remain structurally bullish, but not very aggressive in the short-term.

Friday we got new Monthly Candlesticks, so this post will outline a few of the major changes since last month.

From the desk of Tom Bruni @BruniCharting

One of the topics I spoke about during my Chart Summit presentation on breadth last month was the relative performance of Equally-Weighted versus Cap-Weighted Indexes.

I always hear that the market cannot go higher on an absolute basis if the Equally-Weighted S&P 500 is underperforming the Cap-Weighted.

So is that the case? Let's take a look.

From the desk of Tom Bruni @BruniCharting

It's been about three weeks since I wrote this post looking at breadth across various Equity markets since January 2018.

JC wrote a post today about "The Cards We've Been Dealt" which references some of these stats, so I wanted to update some of them and highlight another way we use them to measure breadth.

We have to play the cards we're dealt. Like it or not, this is the environment we're forced to invest in, but only if you want to. You don't have to invest. Cash has been a viable option for 6 months. It's worked out great. Most stocks, sectors, US and International Indexes are still below their January 2018 highs. I can give you the exact numbers like we provide for our Institutional Customers, but just take my word for it. It's not even close. We've been in a 14-month sideways range, or downtrend, depending on who you ask. Either way, it's not an uptrend for most stocks.

Now, this 14-month nothing burger comes within the context of a major bull market in stocks, that arguably started in 2016. After a monster run throughout 2016 and 2017, the stock market, both U.S. and abroad, has consolidated those gains. It seems perfectly normal, and well deserved, if you ask me.

We've been erring on the long side of stocks for the last 6 weeks, taking trades where the reward/risk is heavily skewed in our favor, but are still seeing mixed evidence regarding the market's ability to make new highs in the short-term.

From the desk of Tom Bruni @BruniCharting

The Equally-Weighted Semiconductor Index recently made new all-time highs, while the cap-weighted sits a few below its 2018 highs. What's next for Semis? That's what I hope to answer in this post.

Everyone these days is talking about yield curves inverting. It's the topic du jour, similar to things like golden crosses and 200 day moving averages. The difference is that this one is more intermarket oriented. "Well if this happens to bonds and that happens to rates, then this historically happens to stocks, or the economy". Observing the behavior of one asset class to help make decisions on another is called Intermarket Analysis, or "Cross-Asset" in some more institutional circles.

I don't think there is much more for me to say at this point about the yield curve. The crew over at The Chart Report pretty much covered it all beautifully last week. The short end of the curve (10-year minus 3-month) turned negative, but the long end of the curve did not. The 10s-30s spread is steepening and controlled by free markets vs the fed controlled short end. We've seen this happen before, like in the 90s for example, without it sparking bear markets. 

We've been writing about the slow improvement in price, momentum, and breadth over the last few months, leading us to err on the long side of stocks. With that said, we continue to see signals that Equities are not out of the woods just yet.

This is going to be a quick post looking at the potential failed breakdown that can lead to Reliance Communications doubling in a few months.

From the desk of Tom Bruni @BruniCharting

During last week's Conference Call we discussed a lot of the potential catalysts to drive Equities as an asset class higher over the intermediate/long-term, however, we continue to err on the cautious side given our outlook for sideways chop in the short-term.

Thursday I wrote about a growing number of potential "oopsies" (failed moves), so I want to follow up on that post and outline another group of charts that I think are suggesting short-term weakness in stocks.

From the desk of Tom Bruni @BruniCharting

If the US Dollar is falling, International Equities trading via US listed ETFs should outperform US Stocks. When the US Dollar is rising, International Equities should underperform US Stocks.

Sounds like a logical relationship, but as usual, it's not that simple.