Hello Readers, and welcome to another edition of Technically Speaking!
We’ve been experiencing a raging bull market this year, but one that has remained rather subtle (some would say). I say this because the public is used to experiencing the bull market (and recognizing it) when the economic indicators are obviously bullish as well. But we have had a mixed bag of economic indicators that seems to be confusing market participants about future moves in the market. While that may work as an approach, these lagging indicators are too often distracting, stealing the focus from the price action. The most significant advantage of following the practice of technical analysis is that risk management is given top priority. With that as a prerequisite, it is much easier to take market positions based on price movements, ignoring all the noise surrounding it. Ignoring the noise makes sure of early identification of trends.
What are some of the easiest ways to ensure you don’t miss the early trends?- Maintaining scans. When I began my journey in the market, I tracked multiple timeframes for multiple clients. To be on top of things, I had scans ranging from 3-day highs/lows to 52-week highs/lows, multiple timeframes moving averages, and crossovers. I would then create a score based on the number of scans in green or red and paint a relatively clear picture of where the market stands. While that can get quite overwhelming quite fast (been there), it would be easier to focus on a specific time frame and track the scans to identify how they change during a market cycle. This is as basic as it gets when it comes to a system. But I have found it to be helpful to me over the years.
Even if you track indices globally, numerous countries are making new 52-week highs or on the verge of big base breakouts. And that is a wonderful place to start as well! With the Dollar Index correcting lower in the downward sloping pattern and making lower highs and lower lows, equities will feel the tailwind of that correction that could propel the market higher. All this, with the doomsday chatter going on in the background. Nobody knows what tomorrow brings. But as a market participant, you need to know your risk appetite and strategy. Fortune teller was never part of the job description! So if you are wading through this market trying to find your way, you can start with the simple exercises mentioned above to find your footing and build from there!
Until we meet again, Think Technically!
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I keep hearing the market’s on life support, but June has been another really terrific month that’s rewarded investors yet again for buying stocks.
I hope everyone’s done well.
With June in the books, I’m continuing to keep a close eye on many of the possible rotations (and possible rebound levels) developing out there, whilst I know many would like me to cover Tech again, I don’t see the point in going over old ground.
Today, I’m just going to get into some areas of the market I currently find interesting, so let’s just get into it.
June – Month to Date
Something I tend to notice much more than most, is when the market decides to move out of 1 area and into another.
From the 10 ETF’s above, do you also notice less growth and more value?
When 1 area goes down, another area tends to go up, I don’t make up the rules, that’s just how investor behaviour (price) works.
S&P500 Value ETF (IVE)
The S&P500 Value ETF, which as you can see has a fair amount of technology exposure, is on the cusp of breaking out to new all time highs, and this is information I want to pay attention to.
ARK Fintech Innovation ETF (ARKF)
Or how about Auntie Cathie and her Fintech ETF?
She’s taken a lot of flak over the last couple of years, but with the out-performance in growth over value this year, there’s probably a comeback story in there somewhere.
A break out on both an absolute and a relative basis, what’s not to like?
Social Media (SOCL)
We’re seeing charts like this setting up absolutely everywhere just now.
If Social Media is above $39 and breaking out on a relative basis, again, what’s not to like?
Let me be clear about my thoughts on Bitcoin and crypto in general.
I don’t buy it and I don’t like it and I couldn’t care less if Blackrock are getting involved.
I much prefer sleeping soundly at night.
That said, I do of course have many professional clients and members who want my thoughts on Bitcoin, and this is the chart I’m working with just now.
Maybe that $31k-32k level offers something?
I keep hearing it’s just 5 stocks driving the market performance this year, and if you’re hearing it too, you should pay close attention to who you’re listening to.
These folks continue to be downright lazy and just aren’t putting in the hard yards.
It takes a special kind of economic analyst to tell everyone else they’re wrong, and to continually push out confirmation biased narratives when stocks have offered the returns of a lifetime this year.
Thankfully I like to pay attention to price, because it’s the only data that matters.
If the market crashes / corrects tomorrow, next week, next month or next year, it’s not a problem, that’s why we manage risk around here.