When was the last time Small-caps were not a mess? At least a year now right?

The bearish argument has been that small-caps (and others) are underperforming the large-cap stocks and therefore, the divergence is a warning signal that the market is about to fall apart. Along the way, I've asked the question,

What if we get rotation into small-caps rather than the rotation out of large-caps that you keep promising me?"

In other words, instead of the last ones finally falling, what if the stocks down in the dumps get their act together and start playing catch-up?

What does the market look like in that scenario?

Well, I'm still in the camp that we see the latter, rotation into small-caps, not the former where the S&P500 crashes and we go into recession. Here are small-caps relative to large-caps. If we are going to start to see outperformance from the little guys, this would certainly be a logical place for it to start:

Notice how when this ratio bottomed...

From the desk of Tom Bruni @BruniCharting

This morning JC did a review of the S&P 600 sectors to identify the structural trends of the major small-cap indices.

This post is a follow-up to outline a few names that have gotten our attention on the long side.

In this Episode of Allstarcharts Weekly, Steve and I talk about the fact that the only sectors making both weekly and monthly all-time highs are Consumer Staples, Utilities and REITs. That's not exactly the type of leadership one might expect to see in a strong bull market, leading many to believe that it is not, and therefore we should be selling stocks. My argument is that while on paper, yes, technically those ARE the only ones making new "weekly AND monthly" all-time highs, sectors like Technology, Consumer Discretionary and Communication (heavily weighted $FB & $GOOG) are just a stone's throw away from doing the same. These are all far from "Defensive" sectors. I think the positive rotation continues and these sectors play catch-up.

In elementary school, nothing was more interesting to me than Space. And a quick look at my Lego collection would confirm this in two seconds flat. I was obsessed. But more in the "great unknown" way. So many questions. So many possibilities.

As an adult, I'm still fascinated by people (Elon Musk, Richard Branson, etc) and companies who are involved in trying to bring humanity into space and further exploration. And it makes me happy to see the stocks that represent these endeavors do well, because its often a clue that they are on to something, that they are making headway.

In recent days, the US Aerospace & Defense ETF, which tracks all the biggest names in this space, showed signs of making new discoveries -- of all-time high price territories.

If you've been in our world long enough you've heard someone say, "Technical Analysis Is Voodoo". As far as I'm concerned, the more people who think that the better it is for us! As Technicians we are analyzing the behavior of the market and its participants. Our human emotions are driven by fear and greed and therefore markets trend, by nature. This is why Technical Analysis works. Today I sit down with Sebastian, the wine maker at Rancho Maria Winery in Sonoma, CA, to discuss this very topic.

From the desk of Tom Bruni @BruniCharting

There are a lot of messy charts out there, but we've been discussing the importance of having a global perspective and using weekly/monthly charts to stay focused on structural trends as opposed to the day to day noise/chop we've been experiencing.

Today we want to look at an area showing relative strength that's still offering opportunities for those who need to put cash to work.

Sometimes we spot an opportunity, but we have to be quick to capitalize on it. Fading volatility spikes is one of those situations. If we're willing to take on a little more risk in favor of a high probability setup and we act quick, nice profits can be earned. We've got a play in Gold developing right now that offers up this potential.

This post is going to update some key levels in the Commodities we've been watching/participating in.

With markets pointing higher (if you follow price and ignore the headlines, like a responsible trader), it makes sense to take good looks at stocks coming out of strong bases. One hospital stock recently caught our attention as it is beginning to quietly emerge out of a 4-year base.

This is not just a Stock Market, this is a "Market of Stocks". And not just Stocks from America, but Stocks all over the world. Stocks don't move up and down because of what is happening in New York or Washington DC. They move based on the supply and demand dynamics for the asset globally. To suggest otherwise is irresponsible.

Let's look around the world, because it's the right the thing to do. And let's see how stocks look globally, rather than be narrow minded into thinking the world revolves around what happens within US borders. 

Daily charts get a lot of love. I certainly preach the value of monthly charts every 30 days or so. But the weekly charts, ladies in gentlemen....the Weekly Charts, allow us to see through the day-to-day noise, but keeps us within an intermediate-term time horizon. On weekend mornings some people read the newspaper with their coffee. I go through my weekly charts.

Here are a few that stood out in the United States this week:

Connie Brown is the author of one of the first books I ever read on Technical Analysis. She was the one who inspired me to use Momentum as a supplement to price behavior, particularly the Relative Strength Index (RSI). It was Connie Brown who taught me how to think outside the box and question the default settings on traditional charting software. It's that next level thinking that has helped me grow throughout my career. It is a real treat for me to have her on the podcast and I think she is a great compliment to some of the other guests we've had on over the years. In this conversation we go back to the stock market panics of the 1800s, go over different global indexes and how to use them to make decisions in our own markets. If you're interested in Technical Analysis at all and want to learn how to think about things a little differently, this is the podcast episode for you!