Relative Strength is something that I take very seriously. When markets are falling, we want to look for stocks holding up the best. That is what we call relative strength and tends to lead us towards the future leaders for ensuing rallies. It's the same thing on the way up. When markets are rallying, like we saw in the past week for stocks, the ones that don't participate are showing their true colors.

One of the most valuable tools we have as technicians is the ability to go through every single stock in the Dow Jones Industrial Average and every sector and sub-sector in the S&P500 so that we can weigh all of the evidence. It might take some time, but I promise you that there is no better way to gauge the strength or weakness in a market, than by going through them all. Since most people don't have the time to do this work as regularly as I do, my annotations and notes can easily be referenced in the Chartbook.

Today I wanted to share some of my conclusions after running through all of the Dow Components and S&P Sectors on both weekly and daily timeframes. This analysis consists of over 120 charts and all of them have been updated today in the Chartbook.

The Stock Market has gone no where in 6 weeks since we originally wanted to take profits on all of the long positions we were laying out in late January and early February. During this period of no advance, we have seen a massive deterioration in market breadth with fewer stocks participating. Important sectors like Technology are breaking down hard, which is further evidence that taking profits in late March was the best course of action.

At this point, we now want to err on the short side and aggressively be positioned to take advantage of more selling to come in stocks.

From the desk of Tom Bruni @BruniCharting

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There has been a lot of talk about how the recent rally has been accompanied by a dramatic improvement in market breadth, so I took the time to see if the data I track supported that conclusion.

The first study on the major S&P 500 sectors and US Indices was completed by calculating how far the indexes were from their 52-week high compared to the average component in the index.

With the deterioration in market breadth throughout the entire month of April and bearish momentum divergences showing up in some of the most important stocks, sectors and countries in the world, I think some exposure on the short side here is warranted.

Today we're going over my favorite short of all the Dow 30 Components.