You guys who know me already know that this is my favorite exercise of them all. We only do this 12 times a year. Let's just say that it takes you an hour, if you really want to take your time, that's 12 hours of your entire year. Think about the amount of time you spend each year performing other analysis. As far as I'm concerned, it's not even close. These 6 hours (for me it's 6) are easily the most valuable 6 hours I spend all year analyzing markets.

This process allows us to take a step back, which forces us to identify the direction of the primary trend. It's impossible not to, especially when you're seeing similar themes across Indexes, sectors and asset classes.

Here's what stands out from this month's review:

With every month comes a new set of monthly charts, so I want to use this post to step back and point out the major changes since the last time we looked at them in November.

As I was updating our Monthly Chartbook today for members, one theme that stuck out clear as day is that there are really two separate markets in Indian Stocks right now.

From the desk of Tom Bruni @BruniCharting

Short-term strength in Precious Metals continues, so I want to do an in-depth analysis of the space like I did last August to see if we're now entering "The Golden Age of Precious Metals".

One chart that I think sums up how I feel about Precious Metals is an equally-weighted index of Gold, Silver, Platinum, and Palladium. While no longer in a long-term downtrend, it's not in an uptrend either. All that can be said is that it's testing the top of a multi-year range. Not all that exciting.

Click on chart to enlarge view.

Coming into the year, the most important chart I was watching was the US Dollar. As far as risk appetite was concerned, I felt the Dollar would be a great tell. The way I saw it, the Dollar rallied throughout 2018 to achieve its upside objective and then broke the uptrend line from those former lows. If we were to just rip through those key levels without at least some kind of pause or consolidation, it would most likely be because of a tremendous flight to safety. Stocks would probably be doing poorly under those conditions.

But flip that thesis upside down, and a weaker Dollar would most likely mean strength in stocks. This is exactly what we've seen throughout January = A weaker Dollar and higher stock prices:

You know what is not a characteristic of a downtrend? All-time highs!

Friday afternoon, the Medical Equipment Index went out at new all-time weekly closing highs relative to the S&P500. We look to relative strength as a leading or coincident indicator for stocks. This sector's behavior is no different.

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,