We finally had a bounce…
Now, in order to continue higher, $SPY needs to stay above 432.
Expert technical analysis of financial markets by JC Parets
by David
From the Desk of Kimmy Sokoloff
We finally had a bounce…
Now, in order to continue higher, $SPY needs to stay above 432.
by David
From the Desk of Kimmy Sokoloff
What I’ll be looking for today is if $SPY can hold on to the 425.50 area.
We need to defend this area.
Otherwise, we can head quickly down to 420 and then the 200-day moving average at 418.60.
by JC
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From the Desk of Steve Strazza @Sstrazza
Welcome to The 2 to 100 Club.
As many of you know, something we’ve been working on internally is using various bottom-up tools and scans to complement our top-down approach.
It’s really been working for us!
One way we’re doing this is by identifying the strongest growth stocks as they climb the market-cap ladder from small- to mid- to large- and, ultimately, to mega-cap status (over $200B).
Once they graduate from small-cap to mid-cap status (over $2B), they come on our radar. Likewise, when they surpass the roughly $30B mark, they roll off our list.
But the scan doesn’t just end there.
We only want to look at the strongest growth industries in the market, as that is typically where these potential 50-baggers come from.
Some of the best performers in recent decades – stocks like Priceline, Amazon, Netflix, Salesforce, and myriad others – would have been on this list at some point during their journey to becoming the market behemoths they are today.
When you look at the stocks in our table, you’ll notice we’re only focused on Technology and Growth industry groups such as Software, Semiconductors, Online Retail, Solar, etc.
Then, like any good technician, we filter the list down to those closest to new highs.
This allows the cream of these strong groups to rise to the top and helps streamline our mission to identify technical breakouts in the top-performing stocks.
by David
From the Desk of Kimmy Sokoloff
Today $SPY closed the gap I spoke about at 422.92, and we bounced.
We’ll see if we continue higher tomorrow…
We joke that when stock markets get stormy, it’s time to head over to Uncle Warren Buffett’s house to ride out the storm.
Of course, no science or extensively backtested algorithm is at play here that gives us this conviction. But time and time again, we’ve been rewarded for selling naked puts in $BRK/B when stocks slide and $VIX spikes.
If it ain’t broke…
Here’s a recent chart of $BRK/B that shows a level of support around $350 per share:
We’re going to lean against this level for our risk management purposes.
Here’s the Play:
I like selling $BRK/B November3 (weekly) 350 puts for approximately $5.00 per contract. I’m choosing this weekly expiration instead of the regular November monthly options because Berkshire is expected to announce earnings on November 3rd and I’d like to be out of my position (win or lose) before that deadline.
Our risk management is simple: If we see a $BRK/B closing price below $350 per share, putting our short puts in-the-money (ITM), that is my signal to close the trade, book the likely loss, and move on. I won’t be interested in sticking around to see if this is a false breakdown while holding a position that has the potential for unlimited losses.
Meanwhile, I’ll leave a resting good-til-canceled (GTC) limit order to buy these puts back for $2.50 per contract — half of what I collect in premium today. I want to take the “easy” profit and move on to the next trade.
In the unlikely event that we’re still in this position on the eve of expiration day which is also the day Berkshire announces earnings, I’ll close the trade down win or lose. I don’t want to be holding these short puts with their super high gamma into the binary risk event that is earnings announcements.
If you have any questions on this trade, please send them here.
If you missed last week’s video Jam Session, you can catch a replay on Stock Market TV.
P.S. We do trades like this regularly. If you’d like to leverage Best-in-Class technical analysis into smarter directional options trades, try out All Star Options Risk Free! Or give us a call to learn more: 323-421-7991.
by David
From the Desk of Kimmy Sokoloff
As of now, $SPY is holding the 425 area.
We could see a bounce, but I think it would be short-lived.
Again, not a ton of names stand out to me.
by David
From the Desk of Kimmy Sokoloff
It was straight selling all day, no bounces.
$SPY has some support here at 425, then 422.92.
There’s potential for a gap down tomorrow.