Monthly Breakout Watchlist (October)

The long-term charts of the major indices remain in consolidation patterns within larger uptrends. I realize there is a ton a angst due to the pending presidential election, Fed interest rate policy, short-term trends, etc. however zooming out the timeframe a bit clears up all of the noise and shows us a market that remains in a bullish trending posture. Many are worried about the Russell 2000 (small caps) here yet one look at the monthly chart shows the first down month after 8 vertical months of uptrend. A pause and some rotation there would not be a major concern, it would actually be pretty normal considering the recent rally it has had since February.

Yes breadth has weakened over the past two months, but rotation remains in place as offensive sectors continue to be the focus of new funds coming into stocks. This month's list of new base breakouts is top heavy Financials, Regional Banks in particular look very strong at the current time.

I always take my cue from the stocks themselves rather than opinions, indicators, macro fears, etc. If stocks are making new highs and breaking higher from bases I have places to deploy fresh capital. Should those breakouts fail we will be stopped out for modest losses and will await the next signals.

ODFL

RJF

YDKN

CBF

FRME

AWH

FFIV

EXPE 

If you missed my early post this week regarding Relative Value and how I use longer-term trends to find opportunities give it a look here. All of the above setups are now igniting from that basic strategy and could become large winners over the next several months to year +.

Thanks for reading
-ZT