We are back with another episode of The Money Game Podcast with Phil Pearlman. Today we talk about the inability for some people trade US stocks from the long side due to biases stemming from past experiences. This is a real thing that we see constantly. So we talk about the causes, being aware of these feelings and what can be done to overcome these hurdles. I'm lucky that I've been through enough bull market and bear market cycles to not get stuck into betting on just one side or the other. But some people have a real fear of admitting they're wrong and turning bullish at, what they think might be, precisely the wrong time. Some of this is driven by ego and some is just irrational anxiety. This is a really important conversation and one that I will likely listen to again several times over in the future.

Okay, having a play in mind for Kansas City Southern $KSU made the title of this post low hanging fruit. Captain Obvious, this guy.

Our boy JC here at All Star Charts went shopping this weekend and couldn't help catching a glimpse of the cover of this week's Barron's attempting to instill fear into the hearts of Railroad investors. He, like me, is a natural skeptic of headlines. So he dug into the sector and was not surprised to see price action telling a different story. One of the most compelling charts to me is the one for $KSU and I'm liking the route these tracks are headed.

From the desk of Tom Bruni @BruniCharting

We look at a lot of charts every week, so it's not surprising that we often come across charts that look "too simple."

A setup we've seen thousands of times or a trend that's reaffirmed itself time and time again, yet I always find myself being skeptical of a chart that looks textbook in nature.

Today I want to take a look at one of those charts.

From the desk of Tom Bruni @BruniCharting

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?

We continue to see prices in the major indices bounce as breadth and momentum divergences remain intact, however, many of the trades we've outlined have moved away from their optimal reward/risk level.

Today we're outlining stocks we can be buying today, or in the near-term.

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?

We've all been there and we've all seen others do it to. We get one data point and then all of sudden we're drawing direct conclusions based on that number. Think about how silly it sounds to make decisions based on a government report or even single chart or "technical pattern".

The first thing we need to do is take a deep breathe (We live better when we're breathing). Then we want to ask ourselves, "Ok, this is new data. How does this fit within the context of all the other data points". We also want to identify how much weight we want to put on this particular data point.

It's funny, when I first started studying for Sommelier exams, I caught myself doing the same thing. Instead of looking at the wine, smelling it, tasting it, thinking about what it could possibly be and then coming up with a guess, I was already making guesses just by looking at it. Light body? Pinot Noir!!! Heavy tannin? Napa Cab!!! Low acid white? Viogner all day baby! Wrong, Wrong and Wrong again!

I was making the same mistake people in the markets do every day....

You've got to love a stock breaking out of a seven-year base and doing so with options pricing in the lowest volatility levels all year. And when it is in a strong sector that has been among the leaders all year, I'm licking my chops.

From the desk of Tom Bruni @BruniCharting

The TSX Composite is peaking its head out above resistance and into the fresh air of all-time highs, but can the recent strength continue?

Today we're looking for answers in two sectors that matter, Financials and Energy, which account for roughly 50% of the index's weighting.

First off, here's the TSX Composite Index breaking to new all-time highs, slightly exceeding its former highs of 16,650. Momentum has yet to get overbought, but if prices are above that level then we need to be erring on the long side with an upside objective of 18,300 over the next 6-12 months.

Click on chart to enlarge view.

Financials make up a third of the TSX Composite and look to be resolving from a 21-month base that began in January 2018. It's had several attempts at this, but this weekly close above its downtrend line is more decisive of a breakout than we've seen in the past.

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One of my favorite parts of living in Sonoma, CA is going to the local market. I'm right in the heart of wine country so anything protein or produce is going to be off the charts. On the way out of the store on weekends and/or early in the week, it gives me a chance to glance at the papers and magazines. This happens much less frequently these days vs when I lived in New York City and could catch a peek at some of the cover stories every day and usually multiple times on every block.

So this weekend I'm walking out of the store double fisting sea bass (on my way to make Greek Carpaccio), and caught a quick glance at the Barron's cover story which suggested selling Railroad stocks! I'm certainly not going to take the time to read what it says, but I saw enough to turn it into a blog post explaining why I want to take the other side. To be clear, I don't mean to pick on Barron's. They're a legendary publication and quote me regularly. But that doesn't mean we have to agree all the time.

Here is this weekend's cover, for those who haven't seen it:

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Raoul Pal is someone whose work I've admired for years, both for his global macro perspective on the markets and the amazing job he and his team have done with Real Vision. I like how they've removed a lot of the conflicts of interest that come with traditional media reporting and the sensationalizing that comes along as a result.

As a Macro Analyst, he does a lot of intermarket, or "cross-asset", analysis. Raoul and I see the world through a similar lens. One area where we differ is in our experiences throughout our careers and how that's shaped our view points and biases. I really enjoyed that part of the conversation. As far as current markets are concerned, Raoul thinks that negative rates in the U.S. are a real...