There is something fishy happening in the bond market these days. Sentiment is hitting historic bearish extremes as US Interest Rates have fallen over the past month. This to me seems like a "too little too late" sort of thing from those who missed the bond sell-off that began last summer. If you recall, we had been ultra-bearish bonds (bullish rates) since the middle of the summer (see: August 3, 2016). That worked great and all of our targets were hit in the 4th quarter. Since December, we've been approaching the bond market from the long side and sentiment these days is reiterating why we would still rather err on the bullish side moving forward.

One of the things I've been working on behind the scenes is building the technology necessary to deliver my sub-sector analysis. Until now, you guys only see the end results. Through the Chartbook, I've been able give you access to my analysis on many things, including the sector and sub-sector ETFs. Once I've concluded that I like a particular sector, long or short, I'll then break down the components of that sector to find stocks that can participate in direction of my overall thesis. I share those with you on the weekly letters, monthly conference calls and quarterly playbooks. Moving forward, I'm going to be sending you individual deep dives into different US sub-sectors when I see something that stands out.

Today's deep dive analysis is on Media Stocks. This is a sub-sector of the overall Consumer Discretionary space:

Every month I host a conference call for All Star Charts Premium Members where we discuss ongoing themes throughout the global marketplace as well as changes in trends where new positions would be most appropriate. This includes U.S. Stocks & Sectors, International Stock Indexes, Commodities, Currencies and Interest Rate Markets.

This year has started off how we wanted it to and I will be following up on many of the big ideas we discussed in the Q1 Playbook that I published in late December. I've spent most of this week doing a deep dive into a lot of the sub-sectors to find where some of the strength lies underneath the surface. A good example has been the strength Medical Devices within the underperforming Healthcare space. But there are several more out there that we'll talk about.

This month's Conference Call will be held on Wednesday January 18, 2016 at 7PM ET. Here are the Registration Details:

I'm extremely fortunate to have a front row seat to the most incredible display of human emotions in the history of mankind. Every day I get to watch markets move up and down based on fear and greed competing with one another at all times. One of the things I find most interesting is how humans tend to behave at the beginning of a perceived cycle. For you guys who think these psychological events don't impact the stock market, you're crazy. Seasonality is something I study very closely, particularly when markets ignore seasonal tendencies.

US Treasury Bonds have been a market that we've been watching very closely over the past couple of months. Remember this had been a favorite short of mine since the Summer, but all of our downside targets were hit in the 4th quarter. Since then, it has no longer been a short, and we've been waiting for it to set up to be a long for a mean reversion. Here is what is now going on this week:

Here is a list of trade ideas organized by date, ticker symbol and directional bias. Please make sure you have clicked on the link and read the details surrounding the trade before acting upon any of them. Also, make sure you have checked with your financial advisor and tax accountants to make sure you are suitable to be executing what is discussed on this website. The risk management procedures and targets are detailed for each idea. Please read and review the terms and conditions page before making any trades of your own.

The year 2016 is now in the books. As market participants, it is our job to prepare for the coming quarter. We don't care much for year end targets. Those are just a marketing gimmick for wall street sell side firms. The media irresponsibly parades these historically wrong sell side analysts around on the tv and radio and have all sorts of gimmicky specials. We don't have time for that. We're here to make money in the market. So rather than making a list of the "Top 10" this or that, or blatantly making up a number to put as an S&P500 target for a year from now, I thought it would add value to walk you through my entire process as I prepare for the first quarter of 2017.

We're going to go step by step on how I analyze markets. First we'll start with the major US Indexes, both long-term and short-term. Then we'll move on to the US Sectors relative to the rest of the market followed by the US Sectors and sub-sectors on an absolute basis. Next we'll look at the globally to see if international markets are confirming what we're seeing in the US or if they are diverging. In order to finish up our macro analysis, we'll then take a deep dive into commodities, currencies...

What do you guys think? Is it over for Facebook?

I think we're about to find out.

Here's how's I see it:

I like buying stocks that are going up. If there is anything that the market has taught us over the past hundred years is that market prices trend. The major averages, individual sectors, stocks, commodities, currencies, interest rates, they all trend. Sometimes these are uptrends that last years or even decades, sometimes they're downtrends, and sometimes there is no trend and it's just a sideways mess. Remember, recognizing a lack of trend is just as important as the first two. What I like even more is while a stock is going up the sell side likes it less and less. It's completely counter intuitive to us who specifically look for trends to follow. They don't think like us as market participants because they have different motivations.

I've been a full time technician for well over a decade. During this time, I've been lucky enough to meet and become close friends with some of the best and brightest technicians in the world. I regularly discuss the markets with them over email as well as the various conferences and speaking engagements that we all attend. We have spirited debates over what the market is going to do next, who has the better process for identifying opportunities and who nailed or missed the most recent big move. Without fail, I learn something new every time I have these types of discussions. So it got me thinking, and I realized that other traders and investors around the world would love to be a fly on the wall for these conversations and learn some new things too. It's been my goal for the past year to make this a reality, and that day has finally come.

I love technical analysis. I really do. There's no question that finding a nice chart brings a great amount of joy to my life. Today I want to share with you what I think is one of the most important developments to occur over the past couple of months. Interest rates have been ripping higher, yes we know this. But to me it's what is happening in Banks and Real Estate Investment Trusts that continues to grab my attention. These groups of stocks are doing the exact opposite today that they were doing at the beginning of 2016, when I was pounding the table about rates going a lot lower.

Interest rates have exploded higher into year-end from a low near 1.37% on the 10-year yield up to over 2.6%. But one of the big reasons that had me so bullish rates since July was that while the 10-year was making lower lows into the summer, the ratio between Regional Banks and REITs held the early 2015 low and started to rally:

One of the more impressive moves that we've seen in 2016 is in the Industrial space. While we came into the year near multi-year lows on a relative basis (XLI/SPY), we entered December hitting new all-time highs relative to the S&P500. You want to talk about a dramatic change in relative strength? This is something we take very seriously, and definitely not something to ignore. We also want to keep in mind is that this relative strength started well before any election, US or otherwise. This got going in January.

Today we're taking a look at the largest component in the Industrial sector: General Electric $GE, a stock that broke out earlier this year above a downtrend line from the all-time highs in 2000 and is still 30% below the 2007 highs. I think this is where we want to be looking:

Most of us are here to try and make money in the market. Some others are just here to make noise and create content they think will help them drive traffic to sell ads. The importance of the Dow Jones Industrial Average hitting 20,000 is one of the biggest lies of the year. I'm lucky to be good friends with some of the smartest traders and analysts in the world. We email each other all the time privately to share ideas and discuss some of the things we're seeing out there. If there is something worth watching, I'm likely to get an email about it, or at least be included in an email discussion on the topic. So far, zero mention of this arbitrary 20,000 level, but double digit emails from media asking me what I think. See the difference?

Every month I host a conference call for All Star Charts Members where we discuss ongoing themes throughout the global marketplace as well as changes in trends where new positions would be most appropriate. This includes U.S. Stocks & Sectors, International Stock Indexes, Commodities, Currencies and Interest Rate Markets. Transportation stocks have been a huge winner for us and we'll be discussing the sectors and assets that I think can behave in a similar manner in the coming weeks and months.

This month's Conference Call will be held on Wednesday December 14, 2016 at 7PM ET. Here are the Registration Details:

For someone who uses Dow Theory every single day, it's not something that I write about much. I may indirectly reference certain tenets all the time, but rarely do I write specifically about the 130 year old Dow Theory. I think I pretty much laid it all out earlier this year in my post: 5 Things Every Investor Should Know About Dow Theory. The simple minded choose to stick to the Dow Jones Transportation Average and Dow Jones Industrial Average either confirming each other or diverging from one another. And while this may in fact be a one of Charles Dow's tenets (although they were Railroads back then, not the Transports we have today), it does not even make it into my top 5 most important tenets.

I could not be happier to see this rally in stocks all over the world. The Transportation stocks in particular have been especially impressive (See here: Transports 8/24/16). But I want to point to some of the rotation we've started to see in other asset classes since last week. 

One of the more interesting scenarios across the global market place is what is happening in the US Dollar, and the Euro component more specifically. Remember, the Euro represents a majority in the entire US Dollar Index. On Monday, the Euro engulfed the prior 13 trading sessions. This means that it made a new low, below the past few weeks trading, and then reversed to close at a new high, above any of the highs over the past few weeks.

I like to keep an open mind. The one thing I'm certain of is that I'm not certain of anything. So I weigh all of the evidence and then try to find the best risk vs reward opportunities based on the cards that we've been dealt. We can't let our emotions impact our decision making, it has to be 100% dependent on the data at hand. Today, I think one of the more interesting situations is in the US Dollar Index.

One of the characteristics of bull markets and strong uptrends is sector rotation. While Technology was the first to start leading the market higher in July, Financials and Transportation stocks have recently held the leadership duties. You can start to throw in Industrials the past few weeks into the leadership category as well. Meanwhile, some of the mega-cap names have held back Technology, at least temporarily, from continuing to make new highs. But when you look underneath the surface, I believe there is a much different story to tell.

Here is the video recording of the November 2016 Monthly Conference Call for Members Only

In the call we discuss:

• Major U.S. Indexes
• Best and Worst Sectors
• Crude Oil & Energy Stocks Long
• Which Tech Stocks To Buy
• Financials Hitting Our Upside Objectives
• Gold and Silver Keep Struggling
• US Rates Hit Our Upside Targets. Cover bond shorts