In this Episode of Allstarcharts Weekly, Steve and I talk about how the spike in Crude Oil earlier this week is impacting Energy Stocks. When we look specifically at the Oil & Gas Exploration & Production Index, prices broke down below the 2009 & 2016 lows, only to quickly reverse back above. We also saw this happen in the Oil Services Index. Prices of the $OIH broke below the 2001 lows only to get back above it swiftly. I think if we're above 24 in $XOP and 14 in $OIH, we want to err on the long side. If we are in fact seeing a mean reversion in Energy Stocks, I would image Crude Oil will most likely be flat to up in that environment. The levels are set, now let's see how this plays out!
All else being equal, when deciding between two or three viable trades, I'll often choose the one that offers me the best opportunity to neutralize my "greeks risk." Meaning, if my overall portfolio is leaning a little long delta, I might favor the new trade that is short delta. If I'm long a bunch of premium and therefore have a high negative theta score for my entire portfolio, I'd likely choose to add the trade that offers me the most positive delta. My thinking being: if I can neutralize as many greeks as possible, then I put myself in position to let the individual edges and risk-reward ratios play out in my favor without getting negatively affected by any sudden changes in the overall market.
This also applies to timeframe.
A quick scan of my open positions today revealed that I have a relatively high number of open positions with October, December, and January expirations. But just a couple with November expirations. So taking an idea from All Star Charts' September Conference Call, I've found an opportunity that we can play in November.
We are back with another episode of The Money Game Podcast with Phil Pearlman. Today we talk about the inability for some people trade US stocks from the long side due to biases stemming from past experiences. This is a real thing that we see constantly. So we talk about the causes, being aware of these feelings and what can be done to overcome these hurdles. I'm lucky that I've been through enough bull market and bear market cycles to not get stuck into betting on just one side or the other. But some people have a real fear of admitting they're wrong and turning bullish at, what they think might be, precisely the wrong time. Some of this is driven by ego and some is just irrational anxiety. This is a really important conversation and one that I will likely listen to again several times over in the future.
Okay, having a play in mind for Kansas City Southern $KSU made the title of this post low hanging fruit. Captain Obvious, this guy.
Our boy JC here at All Star Charts went shopping this weekend and couldn't help catching a glimpse of the cover of this week's Barron's attempting to instill fear into the hearts of Railroad investors. He, like me, is a natural skeptic of headlines. So he dug into the sector and was not surprised to see price action telling a different story. One of the most compelling charts to me is the one for $KSU and I'm liking the route these tracks are headed.
We look at a lot of charts every week, so it's not surprising that we often come across charts that look "too simple."
A setup we've seen thousands of times or a trend that's reaffirmed itself time and time again, yet I always find myself being skeptical of a chart that looks textbook in nature.
Today I want to take a look at one of those charts.
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. Maybe it's a custom index or inverted, who knows!
We do all this to put aside the biases we have associated with this specific security/the market and come to a conclusion based solely on price.
You can guess what it is if you must, but the real value comes from sharing what you would do right now.Buy,Sell, or Do Nothing?
We continue to see prices in the major indices bounce as breadth and momentum divergences remain intact, however, many of the trades we've outlined have moved away from their optimal reward/risk level.
Today we're outlining stocks we can be buying today, or in the near-term.
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. Maybe it's a custom index or inverted, who knows!
We do all this to put aside the biases we have associated with this specific security/the market and come to a conclusion based solely on price.
You can guess what it is if you must, but the real value comes from sharing what you would do right now.Buy,Sell, or Do Nothing?
