From the desk of Tom Bruni @BruniCharting

In this post I want to highlight some of the most interesting and/or actionable relative-performance charts from our Global ETF Universe. Whether you're interested in actionable pair trades or simply looking for information about where money is flowing in the world, these charts should provide some good perspective on where various markets stand at the start of 2019.

The Public Sector Bank Sector of the Indian Stock Market has struggled since late 2017, however, there are signs that many of these stocks are in the process of changing long-term trend.

Vacation is over and January is in full gear. Over the holidays we had our downside targets hit in the S&P500, Dow Jones Industrial Average (23,350), Dow Jones Transportation Average (9300), Nasdaq100 (6150), and Russell2000 ETF (129). Now, just because these levels were achieved, doesn't mean we can't go substantially lower.

However, in this post we're focused on the current mean reversion we're seeing in stocks around the globe and how to profit from it. We'll worry about later this year later this year.

From the desk of Tom Bruni @BruniCharting

Earlier today we uploaded a post outlining the case for some mean reversion in Canadian Equities, as well as the stocks we're buying to take advantage of that thesis. The same pattern that can potentially drive those stocks higher is also present in the IBD 50 ETF FFTY, so in this post we're outlining the IBD 50 stocks with the best reward/risk.

First let's take a look at the ETF itself, which has fallen 35% since October and recently undercut support as momentum diverged. If prices are above 26.75, this failed breakdown and bullish momentum divergence setup remains intact, targeting former support near 32.

Click on chart to enlarge view.

While it’s clear that a mean reversion opportunity is present at...

From the desk of Tom Bruni @BruniCharting

In late November we wrote about the best long and short setups in the TSX 60, and our winners offset those trades that were quickly proven incorrect. In today's environment we're seeing potential for mean reversion in several areas of Canada's stock market, so we're going to focus on the best reward/risk setups on the long side.

First let's start with the sectors and indexes to identify what areas of the market we're likely to find individual stock ideas.

At the broader-market level, the Equal-Weight TSX 60 is attempting to confirm a failed breakdown and bullish momentum divergence by closing above 135.05, which would signal potential upside toward 143.25.

Click on chart to enlarge view.

The Equal-Weight TSX Diversified Bank index...

USD/INR is at an important inflection point that should set the tone for this pair in 2019. Here's what we're watching for clues into its next major move.

We're headed back to our friendly neighborhood bank teller at JP Morgan Chase. She seems to like handing us cash. Twice she has been quite generous to us and the post-Christmas bounce in shares of $JPM gives us extra interest in coming back for a third helping.

This is the video recording of the January 2019 Conference Call for Members of All Star Options

Since early October, a big question for us has been, "How low can US Stocks go?  Obviously no one knew then, and no one knows now, so all we did know was that we did not want to own stocks. We wanted to be sellers, not buyers. Go to cash and ask questions later, type of mentality.

We've looked at declines in Crude Oil and widening credit spreads as a gauge for what to expect out of stocks. We've been monitoring market breadth for evidence of confirmations of declining indexes or whether they're diverging from them. These internals studies and intermarket analysis techniques are great and incredibly helpful in any environment. But today I want to focus on specific prices levels for the two most important indexes in America. 

Autos were some of the worst performers in 2018, and new lows on a relative basis to start 2019 suggest the first quarter may bring more of the same for this sector. This post will outline why we want to continue to sell strength in this sector, as well as the best ways to express this theme.

Below is a chart of the Nifty Auto Index hitting new 52-week lows relative to the Nifty 500. This trend of under-performance has been intact since early 2017 and appears to be heading back toward the lows it set in 2012-2013.

Click on chart to enlarge view.

While some individual stocks offered great mean reversion trades after a steep decline last September and October, the Nifty Auto Index only experienced a meager bounce. Prices have stalled again and momentum remains in a bearish range, suggesting this consolidation is setting up to resolve to the downside.

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This is going to be a quick post, but I noticed a chart during my analysis that was too nice not to share. It just so happens that it's a great example of how a stock should act when transitioning from a downtrend to an uptrend.

I spent the New Year in Lake Tahoe, which is one of my favorite and most beautiful places in the world. Heading up to the lake with family and friends for a few days (and leaving my laptop at home) really helps clear my head and let's me focus on the environment we're currently living in. I see again and again people trying to compare today's market to "the average" of a dozen or so bear markets in the past. It's painful to watch.

It's hard to remember a time where I saw this much irresponsibility among investors, especially the pros who should know better. These "asset managers" are so busy dealing with investors, compliance, operations, marketing, regulations and whatever else they're busy doing, that they've completely underestimated the amount of risk in the stock market. It's like they forgot that risk is a real thing.

And what are they doing to justify their actions, or lack thereof? They're relying on a tiny sample size of prior market declines to "wait and see" what happens. They think they're "Portfolio Managers", but they should be "Risk Managers". There's a huge difference.