Thanksgiving is well known right here within the US on the 4th Thursday of November and is a day to present thanks. Let me say that I am very grateful for God and household. I used to be blessed with my first grandchild a little bit over a yr in the past and he or she’s completely stunning. I’ve by no means felt a love just like the one I’ve for my granddaughter. When you’ve got grandchildren, I do know you possibly can relate.
All of us have to preserve the inventory market in perspective. It is simply the inventory market. Nonetheless, because it pertains to the inventory market, I’ve a lot to be pleased about as properly.
It is truly fairly humorous how my relationship with StockCharts.com started. I used to be doing nationwide radio with my accomplice John Hopkins and I stored saying issues like, “let’s check out Apple (AAPL) over at StockCharts.com.” So I assumed to myself, “we’re giving StockCharts.com plenty of air time. Perhaps, simply possibly, they’d prefer to sponsor our present and assist offset the expense?” It was a well mannered NO from Chip Anderson, BUT I began writing on the ChartWatchers publication shortly thereafter in September 2006 (loopy that it has been 15 years already – the place does the time go?), and the legendary technical analyst John Murphy joined us dwell on our radio present. Thoughts you, I used to be and nonetheless am a HUGE John Murphy fan. I at all times use the analogy of being a school basketball participant and being drafted by the Chicago Bulls to play alongside all-time nice Michael Jordan. That is what it felt prefer to me interviewing John on my present after which writing with him on the ChartWatchers publication. What an ideal begin to an ideal relationship with StockCharts.com!
This is not only a enterprise relationship for me, although. A lot of my greatest mates work at StockCharts.com. The work that takes place “behind the scenes” is totally superb. Teaming up with this extraordinary group of individuals has in all probability been the very best enterprise choice of my life. Due to everybody at StockCharts.com, I’m grateful for all you!
I think about myself a self-taught technician. I really like analyzing something financial-related. I prefer to dig deep. It is the rationale I began my profession in public accounting as I used to be fascinated to see what made companies “tick.” Numbers and charts are my love languages. I am naturally curious in terms of the “hows and whys” of the inventory market. Who else of their proper thoughts would have an Excel spreadsheet with day-after-day’s shut on the Dow Jones, S&P 500 since 1950 and the NASDAQ since 1971? However we’re all impressed infrequently to be higher variations of ourselves and my enterprise inspiration, largely, got here from John Murphy. I am not an enormous reader, however I learn John’s books and so they’ve performed a significant position in my improvement as a technician. Once I’m requested what e book I might suggest to assist study technical evaluation and the inventory market, I do not hesitate. Go to the web retailer right here at StockCharts.com and decide up your copy of John’s “Technical Evaluation of the Monetary Markets.” It is properly definitely worth the learn and it might change the course of your monetary future or somebody near you, because it did mine. Whereas John’s instructing was invaluable to me, I am most grateful for the inspiration it offered me. I now look beneath each inventory market leaf looking for the inventory market’s subsequent clue. Particularly, John’s intermarket relationships offered the inspiration for a lot of my inventory market steerage, analysis, and training.
I first met John in 2011 on the very first ChartCon in Seattle. After years of admiring his work, he then turned an ideal pal. Thanks John!
Secular Bull Market
Sure, I am grateful for this raging bull market. It is serving to hundreds of thousands of parents across the globe obtain their monetary objectives and desires. The very best information, for my part, is that this long-term bull market hasn’t but run its course. Whereas the monetary media tries to tear the market aside at each flip, it simply retains rolling increased and better. Skeptics have pointed to quantitative easing (QE), the commerce battle, the COVID-19 pandemic, the nationwide debt, and so forth. as the reason why the inventory market can not go increased. But we preserve going increased. The newest cause is inflation that is spiraling uncontrolled. However the growth-oriented NASDAQ 100 ($NDX) is main the S&P 500 ($SPX) over each time-frame in 2021 – year-to-date, final 6 months, final 3 months, final month, and so forth. Inflation KILLS progress shares and Wall Road appears to be like forward 6 to 9 months. If the sensible MBAs on Wall Road imagine inflation might be problematic within the months forward, you’d see it within the relative efficiency of those two key indices. Nonetheless, in the course of the inventory market’s loopy rise over the previous month, this is your relative efficiency:
Progress shares are main. This is not me making “click-bait” headlines. That is undeniable fact. You see, the charts inform us the TRUTH about inventory market habits. It would not get caught up in “what ifs.” It is why technical evaluation is so extremely vital. Here is a price-relative chart to drive house my level:
When inflationary studies started coming in a lot hotter than anticipated in February, you possibly can see that progress shares (IWF) tumbled vs. its value-stock (IWD) counterparts. That vital relative downtrend passed off from February to Could and it is plain. Progress shares had been crushed. However the ensuing relative inverse head & shoulders sample was fairly bullish and we simply broke out above the relative neckline earlier this month. In different phrases, progress shares have now outperformed worth shares since February all through all of the financial imbalances and elevated inflationary readings. What does this inform us? Effectively, it tells me that Wall Road used the promoting within the Spring to build up progress shares. Hey, you do not have to imagine me. Once more, let’s let the charts do the speaking:
The IWF’s AD line rose throughout February because it seemed to be falling out of favor. I imagine it is vital to notice that the AD line has been rising all year long, together with over the previous 7 weeks or in order clear rotation has taken place again to progress shares.
Now let us take a look at the IWD to see how worth shares carried out on the identical chart and timeline:
The IWD AD line truly declined throughout February when it was supposedly being accrued vs. progress shares. Attention-grabbing. Over the previous a number of weeks, the IWD has damaged out on an absolute foundation, but it surely’s been steadily shedding floor vs. progress shares. And its AD line? It hasn’t confirmed the breakout in value.
So the media can hype up inflation all it needs, however so long as Wall Road retains sending me alerts that inflation shouldn’t be an issue, I’ll take heed to the cash and ignore the “click-bait” headlines. In my humble opinion, the media is a pawn for Wall Road. It helps to create the panic and volatility infrequently in an effort to enable huge Wall Road companies the chance to build up at our expense.
You might have a alternative. You possibly can take heed to the headlines that consistently scream the sky is falling or you possibly can profit from all the good instruments and options right here at StockCharts.com to be your personal finance MBA.
Thanks secular bull market!
It at all times helps to be challenged. StockCharts.com has assembled lots of the best technical analysts round. I’d a lot moderately attempt to objectively assess the technical deserves of those weblog authors, present hosts, and nice mates, than to attempt to assess the agenda of the media. It is often most useful when my colleagues disagree with my technical evaluation because it gives one other goal opinion about what’s going down on the charts and out there. I would disagree with their evaluation because the inventory market at all times has two sides, but it surely positively gives meals for thought. And, fairly truthfully, all of us have our personal biases that Dave Keller usually speaks of, so stepping again to think about one other opinion is invaluable.
Thanks to my colleagues for all of your tireless work to allow the StockCharts.com viewers to make extra knowledgeable investing and buying and selling selections!
The StockCharts.com platform has offered me the chance to achieve hundreds of thousands of parents across the globe. Whereas I at all times joke that the one market assure I could make is that I will be improper loads of instances, the reality is that buying and selling and investing is usually a very lonely enterprise/passion. It is a scary factor to take a position for the longer term, as a result of there are such a lot of attainable instructions to go and none of us have a crystal ball. My work and the work of others right here would all be for naught, nonetheless, if it weren’t for all the StockCharts.com neighborhood of fellow buyers/merchants. We recognize you!
Once I returned to EarningsBeats.com in September 2019, I by no means might have imagined the extent of assist I might obtain. It was a no brainer choice for me to return to my “roots” as EB’s Chief Market Strategist, whereas additionally offering me the chance to work with my daughter Erin Webber, a fellow CPA. This neighborhood assist has enabled me to achieve desires that I did not even know had been attainable. Whether or not you’ve got listened to my Buying and selling Locations reveals, learn my weblog articles in ChartWatchers, Buying and selling Locations, and Do not Ignore This Chart, subscribed to our EB Digest free publication, or turn out to be a paid member at EarningsBeats.com, you’ve got performed an element in my success and the success of EarningsBeats.com. For that, I might prefer to say thanks!
The previous is the previous and we won’t change any of it – whether or not we would prefer to or not. However the future shouldn’t be sure or settled. We’ll play a starring position in our monetary future. I am actually an optimist in terms of the inventory market as historical past tells us that inventory costs rise rather more usually than they do not want. Additionally, historical past means that we’re nonetheless within the early to center levels of a bullish tremendous cycle. The large image says that we’re in a multi-decade interval that favors the fairness market. Test this out as footage do actually say a thousand phrases:
Whereas many incorrectly attempt to name main long-term market tops utilizing day by day charts, media headlines, and/or preconceived biases, these kinds of main market reversals are greatest seen and confirmed on long-term month-to-month charts. Secular bear markets have by no means occurred with out 2 technical circumstances current concurrently. First, the month-to-month PPO MUST see a bearish centerline crossover AND the month-to-month RSI should pierce 40 assist. Whereas these alerts is not going to happen at a market prime, they do alert us to the truth that we’ll be in for YEARS of frustration. These alerts completely must be considered as bearish technical affirmation and investing/buying and selling methods must be adjusted accordingly. Happily, we’re probably in Yr 8 of this secular bull market. I think about the beginning of a secular bull market to be the time that we clear earlier tops. Within the case of the present secular bull market, it occurred on April 10, 2013. Earlier secular bull markets have spanned as much as 20 years, which might take us to 2033. Which means we might very properly be in Yr 8 of 20 of a significant market advance. Earlier than you suppose I am completely nuts, it’s good to notice that cyclical bear markets can happen throughout secular bull markets. We have already had two – one throughout This fall 2018 (commerce battle) and Q1 2020 (COVID-19 pandemic) – in the course of the present secular bull market. I am under no circumstances suggesting that we’ll go straight up for the subsequent 12 years. I imagine the secular bull market within the Fifties and Sixties noticed a number of recessions and cyclical bear markets.
Based mostly on historical past, nonetheless, I imagine the subsequent dozen years might be extremely vital in constructing wealth by means of equities as the following secular bear market will most definitely produce a shift into different asset lessons and be a lot, rather more difficult.
As at all times, I am going to attempt to objectively overview the charts and proceed to give you the newest technical data. Historical past gives us many classes, however historical past additionally continues to evolve. We now have to evolve with it as greatest we will. Altering market circumstances require us to vary methods as properly infrequently.
Whereas inventory market steerage, analysis, and training are the three “pillars” of our service at EarningsBeats.com, I’ve at all times been most consumed by the academic facet. I spent plenty of “inventory market tuition” over the previous 35-40 years. All of us need to make a distinction, hopefully constructive, in serving to others. I do my greatest to cross on the whole lot I’ve realized over time (and proceed to study) to assist others keep away from lots of the errors I’ve made. I sincerely hope that one thing I’ve written or stated has had a constructive impression on you someplace alongside the way in which.
I need to thanks in your assist over time. A lot of our members have been with us since 2004, the yr we began our enterprise. It is actually unbelievable to suppose that members have been with us by means of all of our enterprise iterations. If you would like to turn out to be a part of our EarningsBeats.com neighborhood, listed here are two methods to take action:
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No matter assist you’ve got given us up to now, I need to sincerely thanks! We’re trying ahead to a vivid future forward!
Completely happy Thanksgiving and Completely happy Buying and selling!
Tom Bowley is the Chief Market Strategist of EarningsBeats.com, an organization offering a analysis and academic platform for each funding professionals and particular person buyers. Tom writes a complete Each day Market Report (DMR), offering steerage to EB.com members day-after-day that the inventory market is open. Tom has contributed technical experience right here at StockCharts.com since 2006 and has a basic background in public accounting as properly, mixing a singular ability set to method the U.S. inventory market.