Interest Rates in the United States hit new 52-week lows last month. But from the looks of it, the commodities market and stock market are not in agreement with that direction. It's when we see divergences among asset classes that it gets my attention.

Today we're looking at the divergences between stocks, bonds and commodities that I believe are pointing to higher rates this quarter. If we're going to take the weight-of-the-evidence approach, it's 2 to 1 in favor of rising interest rates. 

From the desk of Tom Bruni @BruniCharting

April 10th we looked for a bounce in Healthcare Providers and were early, so several of our trades were quickly stopped out and others didn't trigger at all. Medical Devices were the last subsector standing and once they were hit, we thought that Healthcare was likely close to a short-term bottom.

Given the extreme oversold readings we were seeing in our work (like percentage of XLV components hitting oversold conditions last week) and the subsequent bounce to start this week, I want to outline five names showing relative strength in the space that could benefit from continued mean-reversion in the sector.

More importantly, they offer well-defined risk and a reward/risk that's skewed in our favor.

From the desk of Tom Bruni @BruniCharting

Rotation into Energy stocks continues to pick up. While the reward/risk opportunities at the sector/subsector ETF level aren't great, there are several attractive setups within individual stocks.

In this post I'm going to point out seven names within Energy ETFs XLE, XOP, OIH, AMLP, CRAK, and FCG with extremely well-defined risk and skewed reward/risk at current levels.

Half are buying strength (higher probability, but lower reward/risk) and the others are mean-reversion setups (lower probability, but higher reward/risk). Pick your poison.

What inflation?

This seems to be the talk of the town these days.

Interest rates all over the world made new lows last month and have since then tried to start a recovery. We're seeing this across the developed world in the U.S., Germany, UK and Japan, among others. Meanwhile, journalists at Bloomberg Business Week decided to put a dead dinosaur on the cover of the latest issue asking, "Is Inflation Dead?"

From the desk of Tom Bruni @BruniCharting

Last week's Mystery Chart Reveal focused on the rotation into Industrial stocks. In this post I'm going to point out five names in this sector from the S&P 1500 with extremely well-defined risk and skewed reward/risk at current levels.

The Dow Jones Industrial Average is my favorite of all of the stock market indexes. You know how many charts we look at every week at our shop. So with the plethora of price data that comes across my desk, it's really the simplicity of the 30 stocks that represent the Dow that makes me appreciate the index for what it is.

The Dow is a price weighted index where the highest priced stocks represent a larger portion of the index. For this reason, it often gets dismissed in favor of the "broader-based", market cap-weighted S&P500. Some like myself even prefer the Russell3000 index which is really representative of the US Stock market. Funny enough, as different as these indexes may be on paper, that's why they play the game. Here are what the 3 of these things look like in real life. 

These are the registration details for the monthly conference call held for Premium Members of All Star Charts. In this call we will discuss the global market environment and how to profit from it. As always, this will include Stocks, Interest Rates, Commodities and Currencies. The video of the call will be archived in the members section to re-watch any time and the PDF of the charts will be made available as well.

This month’s Conference Call will be held on Wednesday April 17th at 7PM ET. Here are the details for the call:

From the desk of Tom Bruni @BruniCharting

Healthcare Providers quickly went from hero to zero in Q4 of 2018 after a failed breakout and bearish momentum divergence, but we're beginning to see signs of a potential mean-reversion over the short-term.

Let's start with Healthcare relative to the S&P 500, which has been unable to find its footing since topping 5 months ago. Prices have now retraced 61.8% of their 2018 rally, which may offer some short-term support and transition the trend from down to sideways.

Click on chart to enlarge view.

The weakest subsector within Healthcare has been Healthcare Providers, but a ratio of the two recently confirmed a bullish momentum divergence and failed breakdown by closing back above 1.85. As long as prices are above that level, our risk is well-defined on the long side for a...

What does it mean when you hear, "Overhead Supply"? How does that help anyone?

The market is a beautiful thing. It's driven by supply and demand dynamics, or buyers and sellers, based on reasons that we don't need to know. I've noticed that the majority of market participants like to worry about the "why?". We choose to worry about the "Where, When and For How Long?". It seems like a much better use of our time, particularly if our only goal is to make money. We're not interested in writing gossip columns.

For me, overhead supply is when there are an overwhelming amount of sellers relative to the amount of buyers around a certain price. Sometimes you get the smartass in the room that says, "Well JC for every buyer there must be a seller". Yes, dummy, but there aren't an equivalent amount of willing buyers and sellers and every price. That's why stocks move.

From the desk of Tom Bruni @BruniCharting

Telecom continues to hold up well, sticking with the "reach for yield" theme we've been discussing month in and month out for a while now.

Let's take a look at the ETF and a few individual names we want to be buying to take advantage of this trend.

From the desk of Tom Bruni @BruniCharting

The market remains a “hot mess", so we’re looking under the surface at breadth and risk appetite measures to identify clues as to the potential direction that this 15-month range will resolve itself.

Today I want to look at one of those measures, Consumer Discretionary stocks vs Consumer Staples.

If you're a long-only fund manager that believes the market is headed higher, you're going to be in more aggressive areas of the market like Discretionary. If you believe the market is headed lower or isn't going to do much, you're going to be in the lower beta, often higher dividend Consumer Staple stocks.

So what's happening in these sectors right now?

The Equal-Weight Consumer Discretionary vs Equal-Weight Consumer Staples continues to struggle with a flat 200-day moving average and confluence of support/resistance, but just made new 6-month highs this week. While this chart still work to do to confirm an intermediate-term uptrend, this is extremely constructive action and is suggesting that risk appetite among market participants is beginning to pick up.

Click on chart to enlarge...