There is a reason why Medical Equipment stocks look like Tech stocks and not the rest of Healthcare. They're essentially tech stocks trapped in the body of a healthcare stock. Although they are indeed in the Healthcare space, we need to recognize how they behave, the relative strength vs their peers and then treat them as their own group.

In case you missed it, Medical Equipment stocks went out yesterday at their highest weekly close relative to the S&P500 EVER. This is not evidence of a downtrend or any kind of weakness. Quite the opposite in fact:

Tuesday I posted a mystery chart and asked you all to let me know what you would do. Buy, sell, or do nothing. Many said that it looked like the long-term downtrend was intact, but that you would wait for a downside resolution from this range before acting. I agreed.

So today, I want to reveal the full chart and share why I feel it's relevant.

When you hear people talking about Dow Theory, it usually revolves around what the Dow Industrials and Transports are doing and whether they are diverging or confirming one another. I want to be perfectly clear that while this is certainly one of Charles Dow's tenets from the late 1800s, this is just one of many, and not even in the top 5, as far as I'm concerned. I encourage you to check out my post: Everything About Dow Theory.

Today, we are indeed going to focus on the behavior of the Dow Jones Industrial Average and Dow Jones Transportation Average. Earlier this week we discussed the Dow Jones Composite, which includes the 15 stocks in the Dow Utility Index as well. For this conversation we're analyzing just the Industrials and Transports.

From the desk of Tom Bruni @BruniCharting

Tuesday I posted a mystery chart and asked you all to let me know what you would do. Buy, sell, or do nothing. Most of you said you'd be short or doing nothing until the range resolves lower, while only one or two of you said you'd be long with a tight stop or were waiting for an upside break.

Given how closely this chart resembles the S&P 500 or other major US Indexes, I wasn't surprised by those responses. It still feels like many people have a short bias, so continued churn at current levels or a slow grind higher could leave a lot of people left behind.

Anyway, here's the actual chart and why I feel it's relevant.

There are many ways to gauge the strength or weakness of the U.S. Stock Market. For us, there isn't a single "best way" to do it. The advantage we have is that we just analyze all of them. There are over 50 charts in my U.S. Stock Market Indexes workbook alone.

But today I want to focus on an interesting chart that I don't think gets the credit it deserves: The Dow Jones Composite Index. I really like how it represents all of the stocks in the 3 major Dow Jones Indexes: Industrials, Transportation and Utilities. If you want a broad measure of the most important stocks in America, I think this is it.

Picking tops and bottoms in the market is really hard. Some people claim they can do it and we'll let them. It's those types of people who help create the arbitrage between the aware and the unaware.

Markets are rarely ever putting in a top or a bottom. Most of the time they're just somewhere in the middle. For years I've told my friend Josh that his best blog post ever was one from 2012 which he titled, "Tops, Bottoms and Middles".

He wrote,

This past week during our first Conference Call of 2019, we discussed the continued lack of direction in the indexes and how the relative strength in Financial Services and Consumer Goods stocks was being offset by the weakness in IT and Energy.

By Friday we finally saw some rotation back into Energy, but there are signs that the major indices won't be off to the races just yet.

Andrew Adams is well known for his morning market commentary to thousands of financial advisors at Raymond James for many years. After working along side legendary strategist Jeff Saut, Andrew has started 2019 wearing his new trader hat. Andrew has wanted to go out on his own and trade full time and he has finally made that move. We here at Allstarcharts want to wish him the best of luck on his new endeavors. During this episode, Andrew tells us about his experiences at Raymond James, working with Jeff Saut, earning both his CFA and CMT designations, and now using this body of knowledge...

From the desk of Tom Bruni @BruniCharting

Tuesday I posted a mystery chart and asked you all to let me know what you would do. Buy, sell, or do nothing. By my unprecise and unscientific count, many of you said you'd do nothing and wait for the range to resolve itself, while others were anticipating a breakout.

So today, I want to reveal the full chart and share why I feel it's relevant.

Tuesday I posted a mystery chart and asked you all to let me know what you would do. Buy, sell, or do nothing. Many said that it looked like a downtrend and that a neutral/bearish approach appeared best. I agreed.

So today, I want to reveal the full chart and share why I feel it's relevant.

When it comes to stock market bellwethers, I can think of very few that are as important as J.P. Morgan Chase. If you look at a chart of the S&P500 going back decades and a chart of the JP Morgan, they look exactly the same. This brings me to our current dilemma. As J.P. Morgan goes, so goes the rest of the market right?

If that's the case, then this stock market has its work cut out for it. $JPM broke some serious support levels last month that have kept it below overhead supply, and that's a problem for the bulls.