This is the video recording of the November 2018 Conference Call for Members of All Star Options [Read more…]
It is not often that we fade stocks here at All Star Options. Mostly, we like to identify emerging trends or smart entry points in long established trends and hop along opportunistically for the ride. But given the market environment we’re in, we believe it is only a matter of time before everyone gets touched. And we’ve identified a possible “home run” opportunity to get short a stock that — gasp! — printed new all time highs twice this week! It might truly be the last man standing. [Read more…]
Rates are at multi-year highs and bond prices are at multi-year lows. This has been the trend. We’ve been in the camp that rates would break out above 3% and that 4% was next. This has been logical target for a variety of reasons, but today that is not necessarily the point. I just don’t think it will be quite so simple for rates to continue higher, and a break back below 3% would make rates incredibly vulnerable to fall quickly. [Read more…]
There’s something fishy going on in Interest Rates and the U.S. Bond market right now. We’ve been bearish bonds and constructive about higher interest rates for as long as I can remember. This has worked out well. It was a big part of the bullish stocks thesis and it’s played out. Bonds are at lows and rates are at highs. I just don’t think it will be as easy for this to continue, particularly with what we’re seeing from both a sentiment and intermarket perspective.
Here’s what’s got me thinking differently: [Read more…]
I am really enjoying these conversations with Phil Pearlman. This is the 3rd episode we do where we’re discussing important topics about our feelings and emotions. Today’s topic is Grit, and the advantages that someone with grit has these days over those who don’t. Taking a loss and moving on is not just part of investing, it’s part of life. In this conversation we discuss the Bond Market and the implications of U.S. 10-year yields losing 3% and why Phil is Bullish Grit going into 2019.
Here is the second episode in full: [Read more…]
In corrective and bear markets, bounces and false rallies are powerful and swift. They should not be feared, but they should be respected. And the patient among us will use these rallies for better entry points on our short ideas.
Tuesday’s stock market bounce affords us a great chance to get a better entry in a name that is high on our list to be short — Boeing $BA [Read more…]
As you guys know, we’ve been rooting for a stock market crash for most of October. When we’re shorting stocks, we want the market to drop as fast as possible so we can make a profit. You may not like the repercussions of a severe market correction, but since there is nothing we can do to prevent it, all we can do is try and profit from it. Innocent people’s portfolios will get slashed under those circumstances, companies will shut down and people will likely lose their jobs. An economic recession may even follow. We have no idea and no say in the matter anyway. So we’ve had two options in October: Close our eyes and ignore it? Or prepare and profit? We’ve chosen the latter.
In case you’re wondering, we’re still rooting for a complete collapse in U.S. Stocks. The only thing that would make us more neutral is the Russell2000 Index Fund $IWM holding above 151. Under those circumstances and more neutral approach towards equities is best. In the meantime, we’ll keep pressing shorts and hoping for the worst.
Today, I want to bring up two charts that I believe are pointing to further selling. I could even argue that these are the most important charts in America right now. We’re talking Credit Spreads. When institutional money wants to be aggressive, they position themselves into riskier, higher yielding junk bonds at a faster rate than they do into more conservative, lower yielding U.S. Treasury Bonds. If there is stress and they need to be getting more defensive, you’ll see that flow into Treasuries at a much faster rate than into riskier Junk. [Read more…]
Welcome to the new market regime, young lads. Many of us, and many more that are way older than me, have seen plenty of bear markets. At our shop, we rely heavily on global markets to give us information about stocks as an asset class, so we’re accustomed to seeing bear markets all the time. It’s nothing new to us. But I understand that many of you are new to this whole up AND down thing. It’s normal, I promise.
Today I want to stress an important point that I think gets forgotten: The biggest stock market rallies come in bear markets! You don’t get 6% rallies in the Dow when we’re in healthy uptrends! You need serious volatility to spark something like that, and it only happens when risk is extremely elevated. I’m sure you’ve noticed that we’re getting much bigger down days AND up days in the market lately. This is not characteristic of the type of environment where stocks are going up. It’s the type of behavior we see, historically, when stocks are going down. This is one of many reasons why we’ve wanted to sell stocks throughout October. [Read more…]