We're buying a few Chinese Internet Stocks. If the world isn't ending after all, this could be an interesting place to look for huge winners. I'm already seeing relative strength there.
As March gets under way, it’s time to review positions with March options that remain open (haven’t already hit profit targets or been stopped out).
Wild couple of weeks, but that doesn't mean we deviate from our plans!
Most trades I put on for All Star Options tend to have a minimum duration of 30 days (short premium plays) and often as long as 6-8 months (for long premium plays). As options approach expiration, greeks like theta and gamma start to become my enemy and whipsaw my P/L. Therefore, as options and spreads get into the expiration month, my best practice is to put each position on notice — it’s time to take action.
Today JC discussed our March playbook for Members and outlined some areas we'd be looking for a bounce with well-defined risk and others that we want to be completely avoiding.
I wanted to share a few breadth measures to provide context around the recent decline and see if they offer any clues around what's next.
There are some interesting moves happening in the Indian Rupee, so let's take a look and update our risk management levels and targets.
Here's the US Dollar/Indian Rupee pair on a longer-term basis. What's clear from the weekly chart is that our thesis remains intact. As long as prices are above 69, then the path of least resistance is still higher.
The current market calamity is certainly not sparing many of our long or delta neutral positions. The good news for us is the majority of them have defined risk.
At the open this morning, many of our positions traded through our stop-out levels. But an important point to remember here is that we're looking to see a CLOSE below our stop levels. We're don't jump on an exit the second a level is broken intraday.
There is a lot of trading left in today's session. This is not the time to be dumping defined-risk positions into the hole.
We had mostly "do nothing" responses again this week but buyers or potential buyers came in close second, many of which said they were waiting for confirmation of the momentum divergence and failed breakdown before taking action.
We only had a few sellers, which is interesting because that's the camp we'd fall into as long as prices remain below support.
One of the main reasons for our bearish bias towards this chart is the fact that it's been in a long-term downtrend and consolidations tend to resolve themselves in the direction of the underlying trend.
In last week's Chart of the Week, we wrote about our bullish outlook on Gold and followed it up with a deep dive on the entire Precious Metals space, which included a number of trade ideas to express our thesis. This week, we have a table that helps provide a different perspective on its recent price action but arrives at the same bullish conclusion.
The shiny metal has gotten a lot of attention lately as it currently sits around its highest level in seven years.
After about a 9% surge off of this month's lows, we'd expect prices to consolidate in the near-term. But after that, we're betting on new all-time highs for Gold in the coming quarters as long as prices are above last year's highs near 1,560. Here's how we see it.
We've been very clear about how we wanted to avoid owning stocks this month. Fortunately, bonds have been the beneficiaries of the relentless selling in these stocks. Nothing has changed for the positive. But it's actually some former leaders completely falling apart that now has my attention.
Remember when Industrials broke out to new all-time highs? We said that as long as that was the case, how bad could things be? Well, Industrials are no longer above those former highs and actually just broke down to new 10-year relative lows. This is behavior consistent with an environment where we want to be selling stocks, not buying them: