In a recent report, the All Star Charts team highlighted some mixed signals and the lack of trend in many areas of the stock market right now. These are often frustrating situations for straight stocks players. Luckily for us options traders, we can craft strategies that best suit any market environment we may be in. For today’s play, we’re going to get a little creative, mixing a credit spread with a calendar spread to establish a unique risk profile in a name that we’re cautiously bullish on. [Read more…]
Relatively…Confused
From the desk of Tom Bruni @BruniCharting
We’ve been writing about the lack of trend in the Major Indices and highlighting some relative strength in places like Software and Insurance, but overall signals remain mixed.
This morning I set out to write another post about areas showing relative strength, hoping to find a clean theme that the most actionable stock setups fit within.
What I found can be boiled down to the length of two tweets.
Real Vision: Talking Palladium & Insurance Stocks
From the desk of Tom Bruni @BruniCharting
Last week I sat down with Justine Underhill for Real Vision’s “Trade Ideas” show to discuss a tactical trading opportunity in Palladium and a longer-term play in the Insurance industry.
These are themes I’ve shared with our Institutional Clients over the last few weeks. I hope you find some value in them.
[Options Premium] Base Tractor
In a recent blog post, All Star Charts highlighted a stock retesting a breakout from a very large base. This was the money quote:
First off, big bases take time to form because they are caused by steady institutional accumulation. Mom and pop investors aren’t the ones creating this trend, so I know that there’s underlying demand that will support prices if they do move lower.
Because prices have memory and the base has taken a significant period of time to build, there’s likely been more trading at each price level along the way. As a result of this institutional support, the rate of change to the downside is likely to be less severe versus a name that’s advanced quickly to the upside with less trading activity at each level, and thus less memory among market participants to defend these levels on the way down.
Secondly, our risk is extremely well-defined when trading these patterns. In the event that we are buying a base breakout (or pullback), we know exactly where we are wrong and can generally minimize our risk relative to potential reward.
This is precisely the scenario we see unfolding in Tractor Supply Co $TSCO. [Read more…]
The Bigger The Base…
From the desk of Tom Bruni @BruniCharting
Wednesday’s Mystery Chart is one of my favorite charts, so thank you everyone for your feedback and participation.
I received a lot of answers, but most of you were buyers of this recent pullback, while others were waiting to see if prices reacted positively to support before jumping in. Not many of you were sellers.
With that as our backdrop, let’s get into it.
[Options] Like a Fly to Honey
Like a fly to honey, I’m always attracted to asymmetric opportunities that offer limited risk and the potential for unlimited gains. Trading options allows us to quite literally create these types of risk/reward opportunities every day. It’s built into the very structure of your basic call or put option! And when we can spot a stock chart that offers us a little bit of an edge on the future direction of prices, it is time to take action. [Read more…]
What My Puppy Taught Me About Life
Phil Pearlman has always been a good guy to talk to about a lot of different things. I know for a fact that a lot of your favorite fintwit personalities would agree with that.
Phil doesn’t do a lot of media anymore like he once did, but I do get to catch up with him quite often and we publish our conversations as The Money Game Podcast. You can check out all of those episodes on Technical Analysis Radio and iTunes.
Today we’re talking about what little Daisy Pearlman the puppy taught Phil about life: [Read more…]
Mystery Chart 05-15-2019
From the desk of Tom Bruni @BruniCharting
New Mystery Chart!
For those new to the exercise, we take a chart of interest and remove the x/y-axes and any other labels that would help identify it. The chart can be any security in any asset class on any timeframe on an absolute or relative basis. It can even be inverted or a custom index.
The point here is to not guess what it is, but instead think about what you would do right now. Buy, Sell, or Do Nothing?
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