One of my favorite exercises in our process is the use of "mystery charts." Essentially, we take out the x and y-axes and and all labels to eliminate any biases. The chart can be any security in any asset class on any timeframe on an absolute or relative basis. It can even be inverted.

The point here is to not guess what it actually is (though most of you will try), but instead to think about what you would do. Buy, Sell, or Do Nothing?

From the desk of Tom Bruni @BruniCharting

As part of my weekly review I went through the entire S&P 1500 across on both the weekly and daily timeframes to identify long and short opportunities, as well as any major market themes.

Unfortunately the evidence is still mixed when it comes to the market's next directional move, but there was one chart that I wanted to point out because it reminded that opportunity can often lie where you least expect.

This weekend I was updating our chartbooks for members and preparing for Wednesday's Members-Only Conference Call when I stumbled upon a chart that's too good not to share.

It's a great trade idea, but it also is a great reminder that while the major stock market indexes may not be trending, there's still plenty of opportunity on both the long and short side of this "market of stocks".

From the desk of Tom Bruni @BruniCharting

Yesterday I discussed how we use ratio charts to identify trends for both trading opportunities and information that we can use to make inferences about the stock market's next major move. Today I want to look at an inter-market relationship between Base Metals and Precious Metals that may help provide information about where interest rates are headed.

From the desk of Tom Bruni @BruniCharting

The S&P 500 has rallied more than 10% off its late December lows, making the reward/risk on the long side a lot less favorable as many of the major indexes and sectors approach overhead supply. When the market is at a point on an absolute basis where the weight of the evidence is mixed, the use of ratio charts to identify the trends that are happening under the surface becomes even more valuable. 

The debate seems to be raging between Bulls and Bears as to what's happening right now. The Bulls are declaring THE bottom is in and we're going up from here. The Bears are smugly observing what they think is just another dead cat bounce on our way to lower prices. Who's right?

What if they are both wrong?

Ms. Market loves to frustrate the largest amount of participants she can, as often as she can. And it seems to me the best way to frustrate the most people right now would be for U.S. stocks to tighten up and grind sideways for a little while. With that in mind, we have a nice ETF candidate to sell some delta neutral premium in while the next market direction sorts itself out.

So far, the Christmas Eve low in U.S. stocks is holding. Boy, wouldn't that have a nice ring to it if it sticks and stocks eventually return to new all time highs? I'm not saying it will, but that sure would be interesting.

In the past week, stocks across the board firmed up. But I'm not one to put too much weigh on the first partial week of trading activity to ring in the New Year. I think this coming week will give us a better indication of where the path of least resistance is.

So while I'm not yet convinced it is safe to buy here in the U.S., there is some tempting mean reversion happening in Latin America that has us interested.

From the desk of Tom Bruni @BruniCharting

In this post I want to highlight some of the most interesting and/or actionable relative-performance charts from our Global ETF Universe. Whether you're interested in actionable pair trades or simply looking for information about where money is flowing in the world, these charts should provide some good perspective on where various markets stand at the start of 2019.

The Public Sector Bank Sector of the Indian Stock Market has struggled since late 2017, however, there are signs that many of these stocks are in the process of changing long-term trend.

From the desk of Tom Bruni @BruniCharting

Earlier today we uploaded a post outlining the case for some mean reversion in Canadian Equities, as well as the stocks we're buying to take advantage of that thesis. The same pattern that can potentially drive those stocks higher is also present in the IBD 50 ETF FFTY, so in this post we're outlining the IBD 50 stocks with the best reward/risk.

First let's take a look at the ETF itself, which has fallen 35% since October and recently undercut support as momentum diverged. If prices are above 26.75, this failed breakdown and bullish momentum divergence setup remains intact, targeting former support near 32.

Click on chart to enlarge view.

From the desk of Tom Bruni @BruniCharting

In late November we wrote about the best long and short setups in the TSX 60, and our winners offset those trades that were quickly proven incorrect. In today's environment we're seeing potential for mean reversion in several areas of Canada's stock market, so we're going to focus on the best reward/risk setups on the long side.

First let's start with the sectors and indexes to identify what areas of the market we're likely to find individual stock ideas.

At the broader-market level, the Equal-Weight TSX 60 is attempting to confirm a failed breakdown and bullish momentum divergence by closing above 135.05, which would signal potential upside toward 143.25.

Click on chart to enlarge view.

USD/INR is at an important inflection point that should set the tone for this pair in 2019. Here's what we're watching for clues into its next major move.