Once again this month, I’m going to share info on positions that were closed in the month of June. As a reminder, our exit plans are always laid out ahead of time in each trade idea we publish. In every case, the exits mentioned below were all in accordance with the plans as laid out.
As we head towards July expiration, we have six open positions remaining with expiring July options.
June 2021 is officially over. And what does that mean? For starters, it means that we have monthly closing prices (you know how much we love those). And what this also means is that 2021 has six months remaining.
Time is funny that way, it can feel like it's going fast and slow at the same time. But we gotta do what we gotta do. So we will gladly look at the monthly charts and keep our long-term views in check while deciphering short-term moves.
This is a recap of what has happened over the past six months, in a nutshell. For more comprehensive insights, watch out for our Monthly conference call next week!
You guys see that massive spike in inflows of Tether into exchanges?
Exchanges just saw their 3rd largest inflow of Tether of all time (and by all time, we mean a few years - this is Crypto we're talking about).
The thought process here is that if people are transferring their Tether into exchanges, they're getting ready to load up on these crypto-assets, driving prices higher.
The last time an inflow of this magnitude took place, Bitcoin nearly doubled in a matter of weeks.
A strange thought occurred to me as I was cracking eggs into a well-seasoned pan over the weekend: cast iron pans and technical analysis have a lot of similarities.
This might sound a little crazy, but the idea is worth pursuing. Bear with me while I give it a shot...
Growing up, my family didn't often use cast iron pans. They had a reputation for being hard to use. On the rare occasions that I did use one, food would burn and stick to the pan. So I was stuck with inferior results and lots of cleanup.
We preferred Teflon-coated cookware. Teflon benefitted from great advertising and the promise of progress. They seemed miraculous at first. But the coating would chip over time and bits of it ended up in the food. Still, the cast iron went unused.
But our problems with cast iron had nothing to do with the material. It was how we were using these pans that caused our issues. We didn't understand how we needed to season a cast iron pan with oil. Also, using too much soap on clean up destroys the finish you worked to build up.
This is a quick follow-up to discuss a hot stock from a leading industry group... And of course, it's presently offering us a skewed risk/reward. At the end of the day, that's all we're really looking for!
On the surface, this company is just an old LED light and radio-frequency device maker...
But, that's not the whole story.
They actually manufacture and sell some of the most important inputs and materials for a variety of burgeoning growth industries.
While a seemingly favorable fundamental story is always nice to have as a potential catalyst, it is never enough. For us, it's all about price.
Speaking of which, let's dive in and see what the charts are telling us.
Earlier this week we shared a couple of trading ideas in the Commodities space. While Cotton as a commodity continues to shine through, we're seeing some movement in the related stocks as well.
Today we're here to connect the dots and see the impact of the rise in commodity prices on the related stocks.
So let's dive in!
Cotton has been positive in the recent past and has been achieving its targets. What we're seeing right now is an almost 8-year base breakout in the commodity! You can see the clean move and breakout on the monthly chart below. With that said, the long-term trend of this commodity will remain positive so long as it trades above the level of 24,225.
New highs are not expanding, but neither are new lows
Housing costs fuel inflation but bonds are unconcerned
Risk on/risk off in neutral but broker dealers threaten break down
As 2021 began, the strong trends that emerged in 2020 were intact. But as we get ready to make the turn to the second half, we find ourselves looking at a muddled mess of stalled out trends and conflicting signals. How these resolve will go a long way toward dictating the paths that the market and the economy take over the second half of the year.
From the desk of Steven Strazza @Sstrazza and Grant Hawkridge @granthawkridge
Check out our latest Mystery Chart!
What we do here is take a chart that’s captured our attention, and remove the x and y-axes as well as any other labels that could help identify it.
This chart can be of any security, in any asset class, on any timeframe. Sometimes it’s an absolute price chart, other times it’s on a relative basis.
It might be a ratio, a custom index, or maybe the price is inverted. It could be all three!
The point is, when we aren’t able to recognize what’s in front of us, we put aside any biases we may have and scrutinize the price behavior objectively.
While you can try to guess the chart, the point is to make a decision…
So, let us know what it is… Buy, Sell, or Do Nothing?
Whether you know it or not, we're all exposed to risk from the financials sector (think big banks, GE, etc).
And when I look across the positions in my portfolio, I have significant open exposure on the long side of the market.
This is top of mind for me right now, coming out of our weekly team call. The recent sloppy market action, with no real expansion of new highs, is opening the door -- if ever so slightly -- for the bull market doubts to creep in. We are certainly not making a "Top" call here by any means, but we are observing that the risks of a potential correction appear to be increasing.
So, while we don't need to get aggressive with short bets here, it might be prudent to start exploring some bearish setups and keep our eyes and minds open for opportunities to get tactically short in names and sectors that would likely lead on the downside if the broader markets were to stumble here. And we can do this without exposing our portfolio to too much risk, thanks to the existence of long exposure already on the books.
We debuted a new scan recently which goes by the name- All Star Momentum.
All Star Momentum is a brand new scan that pinpoints the very best stocks in the market. This time around, we have incorporated our stock universe of Nifty 500 as the base. Among the 500 stocks that we follow, this scan will pump out names that are most likely to generate great returns.
While we go through our lists of sectors and stocks on a weekly basis, we thought of launching a product that would highlight the names that are the strongest performers in our universe and those that are primed for an explosive move.
Just like The Outperformers scan, this is a list of stocks belonging to the sectors that display relative strength in the market at any given point in time. Since sector rotation is the lifeblood of a bull market, we will be ahead of the curve before the gears keep shifting.
There's more noise in the crypto space than arguably any other major asset class on Earth.
The sheer amount of people throwing around chart crimes, shilling bags, and stirring the proverbial pot is unheard of.
Human instincts have really been put on a pedestal throughout this entire cryptocurrency experiment. As Ian McMillan eloquently summarized on the podcast earlier this week, this entire space is the perfect microcosm of human behavior in public markets.
With all this chaos, we need a map that guides us to where to go, and what to avoid.
