A stock we've had our eyes on since early February made new all-time highs last week and is showing signs that its upcoming earnings report will offer us a nice catalyst for quick gains.
Every month I host a conference call for Premium Members of Allstarcharts. By now I think you've noticed that we're really increasing the content on our YouTube Channel, so I thought it would add some value to include some of the highlights from this month's call.
It's an hour long video call and about 150 charts, but here are a few things that stood out this month:
A weakening US Dollar has been a positive catalyst for Stocks
Freeport McMoRan is a good example of the types of stocks benefiting from Dollar Weakness, on both a relative and absolute basis
London FTSE100 breaking out of a multi-decade base makes it hard to be bearish stocks from any sort of intermediate-term perspective
Our "Dow Fab 5" is breaking out to All-time highs
Crude Oil is beginning its next leg higher, which makes sense with stock prices rising as well
Yesterday we posted a mystery chart and asked you all to let us know what you would do. Buy, sell, or do nothing?
The responses seemed pretty unanimous, suggesting selling at current levels...and one of you even guessed what it was! Maybe we're making these too easy.
Anyway, we agree with that bearish bias, but were posting to see what other viewpoints might be out there. I guess we got our answer.
Let's get into the real chart and why we feel it's relevant.
With nearly 55 days until April expiration, this is the time I start looking at index and sector ETF’s for possibilities in selling delta-neutral income spreads.
This is an exercise I do every month where I analyze the current volatility priced into each of the most liquid optionable ETFs and measure where each ETF sits within its most recent 90 day trading range.
Well, this afternoon as I went through my monthly analysis, it was determined that out of all of the major ETFs that I follow not a single one offered appealing volatility to sell into and each ETF was trading near the upper or lower end of its most recent trading range. This tells me that ETFs are continuing to trend -- and a trend is not your friend when you are a delta neutral premium seller.
For those new to the exercise, we take a chart of interest and eliminate the x and y-axes and and all labels eliminated to minimize bias. 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 to think about what you would do right now.Buy,Sell, or Do Nothing?
When it comes to market breadth, the Advance-Decline line is definitely one of our go-to's. This indicator calculates the net advancers. In other words, the number of advancing stocks less the number of declining stocks. This cumulative measure goes up and down over time, similar to the market indexes themselves.
Something to keep in mind is the fact that we use the Common Stocks Only A-D Line because there are other vehicles that trade on the NYSE, like closed-end funds for example. If we're analyzing the stock market, let's stick to just stocks in our indicators.
As part of my preparation for my Chart Summit presentation on market breadth, I'm looking at a lot of charts this week. In this post I'll share a bunch of them to provide some perspective on where US markets currently sit from a participation perspective.
The real estate arena has been on a wild ride since early December. The sector (as measured by $IYR, US Real Estate ETF), tumbled more than 13% in less than four weeks, only to completely retrace the move in the next four weeks then continue trudging higher as if nothing happened. The move has been nothing short of astonishing. We've made our bet on a fade with $IYR, but to cover our bases, we've going to take a flier on an individual stock in the space that offers us a nice reward-to-risk opportunity and will hedge our sector risk, somewhat.
This is week is Chart Summit 2019 in Breckenridge Colorado!
We're skiing during the day and charting at night! We have skiers and snowboarders coming from all over the world to this unique event. We've even organized snow mobile tours for those who choose not to ride with us on the slopes. Everyone is welcome!
The full schedule has been released. Check it out!
