We have been pounding the table to be buying U.S. stocks and ignoring the bearish rhetoric coming from almost everyone these days. I have never seen a stock market crash where people have been this prepared for it. I get an email a day warning me about this coming historic crash. We've happily taken the other side of this nonsense and continue to believe the path of least resistance is higher, much higher in fact.
However, the market doesn't care what JC thinks and is going to do whatever the heck it wants. That's life. So ahead of any serious correction, we want to identify levels where we would start to become much more neutral towards equities. Tightening stops, being less aggressive from the buy side, owning put protection and strategies like these are most appropriate under these conditions. Today, I'm going to lay out what it's going to take for us to approach the market from a more neutral to bearish perspective:
This is the monthly conference call for Members of All Star Options. In this call we will discuss the current market environment and focus on price and volatility behavior. Throughout the session, J.C. Parets will add commentary on the technical outlook moving forward, and Sean McLaughlin will discuss the options strategies available to profit from the market activity.
This month’s Conference Call will be held on Tuesday October 2nd at 7PM ET. Here are the details for the call:
Sometimes I think I have a little too much fun writing headlines. But, when we're looking into opportunities in the gaming space, I guess it comes with the territory.
We recently took a look into the newly configured Communications Services Sector and highlighted some component stocks that stand out as notable opportunities. From an options trading perspective, Take-Two Interactive $TTWO offers us the best chance for a profitable play.
Last week was our Members-Only Conference Call, where we discussed what we're seeing in Equities, Commodities, and Currencies. During our discussion around Equities there were two themes that came up over and over again due to their impact on the overall market's direction: weakness in the Financial Services sector and small-cap under-performance.
Given the mixed signals we continue to get from this market, I wanted to share my thoughts on these themes and get feedback on what you all are seeing out there.
During last week's Members-Only Conference Call we discussed a lot of themes, including some potential improvements in the price action of Gold and other metals. However, in this quick post I want to highlight some opportunities that may potentially emerge in the Base Metal space over the next few weeks and months.
This week the Global Industry Classification Standard (GICS) expanded the Telecom Services sector to include Consumer Discretionary and Information Technology components, with it being renamed the Communications Services sector next Friday, September 28th.
In this post I want to highlight the major changes to the sector classifications, chart the new sector (using the back-filled IXCPR Index), and then finish up with some of the components that are the most actionable. State Street, which runs the popular Sector SPDR ETFs, has created a comprehensive document on these changes that I'd encourage you to read in full to understand all the nuances surrounding these changes.
With markets having a big breakout on Thursday, our bullish US equities case continues to be confirmed. And with new all-time highs usually comes lower and lower volatility being priced into options.
For the past month, we've been keeping it pretty simple here at All Star Options. We like simple, so it comes naturally to us. But more importantly, the market is telling us to keep it simple. When volatilities are low and charts are pointing higher, it pays to be a buyer of your friendly neighborhood call option. Options Trading 101. Being buyers of calls in this environment puts us on the other side of the trade from the pikers who fill up ballrooms and banquet halls at Turnpike Hiltons and Marriotts to learn about the latest and greatest Covered Calls Road to Riches.
You're better than this. You're willing to take smart risks and reap the upside rewards.
In this episode I asked my friend Ryan Detrick to come talk about the quantitative work he does as part of the technical analysis he provides for advisors at LPL Financial. I have been following his work for years and have gotten to know Ryan well during that time. I was really looking forward to this conversation and it exceeded all of my expectations. Ryan does an excellent job of using basic mathematics to debunk popular myths told to investors about the market. We discuss the impact of a rising rate environment on U.S. stocks, the Yield Curve, Stock Market Seasonality and some of the things he is currently seeing in the market. This is a can't-miss episode!
Casual readers of All Star Charts will notice we've been warming up to the idea of being bullish Precious Metals and Miners for a turn. Check these recent posts to get up-to-date on our thoughts:
If you're a believer that a short-term bottom is in for Gold Miners, I think a nice short-term, high-probability trade with a clearly defined risk level has presented itself in the Junior Gold Miners ETF $GDXJ. This isn't a sexy play, but it helps diversify our portfolio a little bit by getting us short premium in a high probability (not a guarantee) set up with a good chance of turning us a profit.
We're always focused on positioning. Stocks don't go up because of some article written by a 26 year old journalist who has never made a trade in her life. Stocks move based on positioning from institutions. When the market is caught leaning the wrong way, the unwind can create spectacular moves. This is the key to the market: positioning, not the noisy media.
As many of you know, every single day I look for risk vs reward opportunities that are skewed in our favor. We're not here to be right, we're only here to make money. There is a big difference between the two. In other words, we don't care if we get it wrong. We just want to make sure that when we are right, that we're really really right. Isolating asymmetric risk vs reward opportunities is how we do that, and I believe we do it very well.
I really don't think this market is ready for the US Dollar to collapse. We've had a monster rally in the Greenback all year and emerging markets and precious metals have felt the pain. I believe that's about to change dramatically.
