While the market remains a mixed bag and participation is lacking, we're still seeing evidence of risk appetite.
How do we know?
The stocks that investors are betting against the most are making big moves... to the upside.
And we know just what to do in these environments.
We find the most heavily shorted stocks in our freshly squeezed universe. We wait for momentum to come into these names, and then we ride them higher with the squeeze.
We got new short data recently, so let's talk about how we're playing it.
Our scan is quite simple. It is designed to identify stocks with the most aggressive short positions. When a stock is shorted, it means incremental buyers are waiting in the wings to close out their bearish bets.
We love this, as new buyers are the one true catalyst for higher prices.
When shorts are proven wrong, they become buyers of the stock. In many cases, this happens as momentum flows into these names and fuels massive short-covering rallies.
Born with an entrepreneurial spirit and temperament, Michael grew up in a working-class community full of blue-collar, salt-of-the-earth people who worked honest days for an honest wage. And it rubbed off on him. How could it not?
In order not to be a financial burden on his family, he knew he needed to get out there and hustle. He shoveled snow, mowed lawns, caddied, and worked as a server and waiter. He worked 15 hours a week while in college so that he could earn a degree from Columbia University.
While his peers were coasting through school with trust fund cash bankrolling their adventures, the only free time Michael had was spent in the library, reading books, writing papers, and repeating.
His blue-collar work ethic paid off to this point. But making the transition into the “white-collar” world of finance wasn’t easy.
We love our bottoms-up scans here at All Star Charts. We tend to get really creative when making new universes as we want to be sure they will deliver us the best opportunities the market has to offer.
However, when it comes to this one, it couldn’t be any simpler!
With the goal of finding more bullish setups, we have decided to expand one of our favorite scans and broaden our regular coverage of the largest US stocks.
Welcome to The Junior Hall of Famers.
This scan is composed of the next 150 largest stocks by market cap, those that come after the top 150 and are thus covered by the Hall of Famers universe. Many of these names will someday graduate and join our original Hall Of Famers list. The idea here is to catch these big trends as early on as possible.
There is no need to overcomplicate things. Market cap is a quality filter at the end of the day. It only grows if price is rising. That’s good enough for us.
Have you heard about the breakout in America's online marketplace?
Amazon is up 5% this week as it follows other mega-cap growth stocks to new record highs. Everyone is talking about it.
But there's more to this story.
Online retail is a burgeoning industry, offering investment opportunities in a variety of companies around the world.
These growth stocks provide some of the highest beta vehicles as they are direct plays on the consumer economy.
And Amazon doesn't dominate around the globe the way they do in America. There are other regional plays that offer investors exposure to higher growth markets outside the US.
With Amazon $AMZN making a decisive resolution to fresh all-time highs today, it is an opportune time to talk about the broader online retail space.
Let's dive in!
Following the path of other Magnificent Seven names, here's Amazon.com $AMZN surging to new all-time highs:
Recently, some of the best opportunities have been in the mega-cap space. Look at recent gains in Amazon, Google, Microsoft, and Apple.
People like to complain that “all” the gains are being concentrated in fewer and fewer names at the top of the pyramid. Why is that a bad thing? We can trade those names, can’t we? And why wouldn’t we?
In the past week, I’ve added more exposure in my portfolio to this area.
Related to the tail (big caps) that wags the dog (the market), isn’t this true of our own history of trades?
Don’t our small handful of large winners account for the lion’s share of our total gains? And don’t 80% (or more) of the rest just result in a net wash?
Kind of like the S&P 500, no?
Don’t hate. Participate.
We discuss all this and more in this week’s Jam Session:
Franklin D. Roosevelt: "Comparison is the thief of joy."
Socrates: "Envy is the ulcer of the soul."
Ovid: "Envy, the meanest of vices, creeps on the ground like a serpent."
Seneca: "The envious die not once, but as oft as the envied win applause."
Aristotle: "Envy is pain at the good fortune of others."
Johann Wolfgang von Goethe: "Hatred is active, and envy passive dislike; there is but one step from envy to hate."
Antoine de Saint-Exupéry: "The one who envies, does not really know what he wants."
Alexander Solzhenitsyn: "Our envy of others devours us most of all."
These quotes reflect various perspectives on the nature and impact of envy, from ancient philosophers to modern thinkers.
In the trading world, I don’t think the evils of envy get discussed enough. And in today’s globally connected social media world, it’s a bigger problem than ever.
In today's Flow Show, Steve Strazza highlighted the strength we're seeing in the homebuilders sector. I immediately liked it because I don't have any homebuilding stocks in my portfolio, which needs to be corrected.
Last week, Lennar Corp $LEN released earnings, and the market pretty much yawned. I like that. Because the other name that we liked better -- D.R. Horton $DHI -- hasn't yet released earnings (scheduled for July 18th) and unless they come out with something truly shocking, my bet is the market will be similarly unfazed. This tells me there's an opportunity to take advantage of some overpriced options premiums currently being bid into $DHI options.
Flying down a mountainside on two skis while negotiating tight turns and ever-changing microclimates would be a terrible time to lose focus.
Todd Gordon knows this. If he hadn’t quickly learned this skill in his journey to competitive ski racing, he would’ve likely landed himself onto a stretcher and an air-lift back to base.
There was no other choice.
But for Todd, he’d have it no other way. From a young age, when he found an interest in something – whether skiing or finance – he’d go all in. Nothing else mattered.
And when he discovered the world of trading, he knew what he wanted to do. “There was never a question,” he said.
In college, between classes, skiing, and happy hours, Todd would trade options from his dorm room. It wasn’t a matter of IF he would be a trader, it was a matter of where would he start.
And that answer came right after college when at the age of 22, Todd headed west and joined a proprietary trading group based in San Diego. And from there, he never looked back.
Welcome to The Junior International Hall of Famers.
With the goal of finding more bullish setups, we have decided to expand one of our favorite scans and broaden our regular coverage of the largest US-listed international stocks, or ADRs.
This scan is composed of the next 100 largest stocks by market cap, those that come after the top 100 and are thus covered by the International Hall of Famers universe.
Many of these names will someday graduate and join our original International Hall Of Famers list. The idea here is to catch these big trends as early on as possible.
Let’s dive right in and check out what these future big boys are up to.
This is our Junior International Hall of Famers list:
In today's episode of the Flow Show, Steve and I navigate some trade ideas that would help add bearish portfolio diversification in case the stock market wants to catch its breath this summer.
We discussed two specifically ugly charts, and we both agreed that Block Inc $SQ offers the best opportunity as an options trade.
