From the desk of Tom Bruni @BruniCharting

We always hear the phrases "fading strength" or "selling into strength" from market participants, but what does that mean from a practical standpoint? How do you know what to sell? When do you sell?

In light of those questions, this week's "Chart of the Week" is going to help provide some context around the types of characteristics we look for when choosing stocks to fade.

From the desk of Tom Bruni @BruniCharting

This week's "Chart of the Week" answers the question about what characteristics determine the stocks we're fading strength in, so this premium post will outline the best setups I found during my review of the S&P 1500. If you haven't read the other post, click here to do so as it will provide more context around these trade ideas.

Over the last three weeks Sun Pharmaceuticals has been doing its best Deutsche Bank impression, losing roughly a third of its value and trading at levels not seen since March 2013.

As the largest component of the Nifty Pharmaceuticals Index this performance has been a major drag on the index, however, equally-weighted charts can offer us a much better read of the sector's health.

This post is a continuation of our "Free Chart of The Week", which focused on the use of an equally-weighted Pharmaceuticals Index to make the case that the sector is in better health than the cap-weighted index suggests.

In this post, we'll use that information to identify the stocks in this sector offering us the best reward/risk opportunities.

This past weekend we got new Monthly Charts, and overall the themes we discussed last month are very similar. With that being said, we'll use this post to discuss a few notable developments.

From the desk of Tom Bruni @BruniCharting

Crude Oil is down roughly 35% over the last two months as record bullish sentiment unwound and prices fell in what was essentially a straight line. There hasn't been any reason to bottom-fish this market, but today we received our first indication that a short-term bottom may be in.

During our members-only conference call and our trade management post we discussed why a more neutral approach is best as we identify whether equities are going to consolidate at higher levels or begin to roll over again. We also discussed the importance of taking some profits quickly in an environment that produces whipsaws in both directions.

Over the last two weeks we've seen a number of our long ideas failing and more of our short ideas working, suggesting that lower prices are likely ahead in the short-term and that we should continue to err on the short side of stocks. This post will outline some of the evidence we're seeing supporting this thesis, as well as adding a number of short ideas to our trade list from October and November.

Happy Thanksgiving!

During our family's feast this year I'll be reflecting on my gratitude to each and every one of our subscribers, and to my team here at All Star Charts. I could not ask for a more engaged audience and a more top-notch group of analysts to work with. This year marks the maiden voyage of the All Star Options corner of the All Star Charts platform and the response from institutional and retail subscribers has exceeded my expectations and it makes me ever more motivated to continue crushing it for years to come for all of you.

Sincerely, thank you.

Now let's talk business...

This week we put an options spread trade on in Goldman Sachs $GS and it serves as a vivid reminder that we're not looking for perfection here. We're looking to follow a process.

On October 30th we got more constructive on Indian stocks and put out a massive post with stocks to buy. Given that many of these trades were counter-trend in nature, we expanded on our last trade management post during this month's conference call, discussing strategies that are helpful to know in any environment.

From the desk of Tom Bruni @BruniCharting

While updating our Canadian Chartbooks this weekend, I noticed a few that stood out as offering well-defined opportunities where the reward/risk is skewed in our favor. This short post will outline these names and levels, but members can view all of our Canadian Universe by clicking here.

There aren't many stocks in Canada hitting all-time highs right now, but Rogers Communications is one of them. It's a leading stock in a strong sector, so as long as it's above 68.70, we want to be long with an upside objective of 95.25.

Click on chart to enlarge view.

Financials have been a weak spot in the market, with many long-term topping patterns taking place. Manulife Financial confirmed a head and shoulders top in September and is now retesting its broken neckline. We want to be selling into this strength as long as prices are below 23, with price objectives of 20 and 16.50.

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From the desk of Tom Bruni @BruniCharting

Over the last few weeks we've looked at signs of rising stress in the credit market, interesting relative strength in bond prices, and a trade on the long side in treasury bonds, but today I want to take a comprehensive look at the bond market and highlight what it's signaling for rates and risk appetite in general.

From the desk of Tom Bruni @BruniCharting

We've been looking for breadth and momentum divergences to be confirmed both in the US and globally to mark the start of "the bottom" in equities as an asset class, so today I want to highlight the breadth of one sector which provides perspective on the current market environment.