The big indexes offered us a little pullback this week which has been helping us identify the true standouts -- the stocks that are holding up best in a down tape. We're all about relative strength at All Star Charts as it is one of the most reliable indicators for us. And true leaders really identify themselves when they are swimming against the current while markets are sliding.
So on days and weeks like this, we're paying very close attention to the strongest sectors and keying in on the strongest stocks to see how they react.
Today, one those names is in the Capital Markets space where we're seen tremendous strength this year.
JC & Strazza were riffing this morning on the strength in the Medical Equipment space and so we started brainstorming on some names to play since we expect the strength to continue.
There were a few names bandied about, but the chart and setup that most caught my attention was Boston Scientific Corp $BSX.
What I liked most was the recent consolidation which can act as a solid base of support for a move higher -- which would be all-time highs breaking out of a nearly 20 year base! As JC likes to say: "The bigger the base, the higher in space!" Seems this opportunity has a good shot at that:
Once again this month, I’m going to share info on positions that were closed in the month of August. 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 September expiration, we have three open positions remaining with expiring September options that need our attention. Most of our delta-neutral premium-selling plays worked out in August, which makes sense considering the slow markets we just endured. Let's dive in.
Positions with September options that need monitoring:
During our team's weekly strategy meeting this morning, we were chatting about how the retail sector has just been hanging in there. And don't we know it -- we've had a long puts play in $XRT (the retailers ETF) since late July that hasn't gone anywhere for us. Our thinking was this sector would be the one to lead us down if the markets wanted to trade down.
Instead, it's been hanging tough and JC remarked that it might act as "a big trampoline" for some of the notable names in the space if we start moving higher.
And of course, the 800-pound gorilla in the space is Amazon $AMZN, so if we're going to play a move higher in retailers, it makes sense to start here.
We've already had some great trades come out of this small-cap-focused column since we launched it late last year and started rotating it with our flagship bottoms-up scan, "Under The Hood."
To make the cut for our Minor Leagues list, a company must have a market cap between $1 and $2B. There are also price and liquidity filters. Then, we simply sort by proximity to new highs in order to focus on the best players.
The goal is to catch the strongest names while they're small and still have serious upside potential. If any of these stocks ever climbs the ranks to the big leagues, the returns could be huge. We're looking at 5-10x moves just to break into large-cap land!
Let's dive into this week's report and see what's happening in some of the hottest stocks in the Minor Leagues.
Steve Strazza and I were chatting this morning shortly after the market opened, looking for trading opportunities.
We were scanning the list of stocks we've been watching and one thing that is plain to see is the stocks that are working are really working. And if we're not in them already, there's no real sense in chasing them here.
My line to him was: "It's August 30th. S&P 500 is all-time highs. You're either already long or you're in cash. There's nothing else to do here but take a walk." He agreed.
So with this in mind, I don't have a new trade idea for us today. But I'll leave you with this...
The ASC team published an Under the Hood report last week in which there were a bunch of interesting opportunities to choose from. But I held my fire -- until now.
After letting these ideas marinate a bit, I've been liking the pullback and solid support holding in one of the names.
Anything gold-related has not had any fun 2021. I can only imagine the disdain gold bugs must be feeling as they watch governments print money around the world, all things crypto soaring, and all the while their precious shiny little rocks doing jack squat.
If you've been long gold, I'm sorry.
But there's good news...
JC and I were chatting yesterday about what appears to be an opportunity in the Gold space.
Maybe, just maybe, gold has found a short-term bottom? We're not going to go out on a limb and declare THE bottom, but recent price action suggests to us that a bounce might be in store. As such, we want to get involved for a quick little hit-and-run play.
In last week's Follow the Flow report, there was a name that caught my attention, but it felt to me the stock had gone too far too fast and I didn't want to chase it.
Well, perhaps my patience is being rewarded as today I'm able to get in with the stock 9 points off last week's highs -- but still sitting right above the level in which we'd like to be involved on the long side.
The mostly sideways slide into autumn is continuing, which has kept me on the hunt for more delta-neutral credit spreads to take advantage of during these slow times.
I generally prefer to do these types of trades on sector or index ETFs. But occasionally, I'll take a flyer on a large cap name which isn't likely to suffer any serious price gaps (especially with no nearby earnings events on the horizon).
In the latest All Star Charts Monthly Conference call, the team mentioned a familiar name that is setting up for some continued sideways action that looks like a really good candidate for an Iron Condor trade.
The team had our weekly internal strategy session this morning where we go over things we're seeing in the markets. What's moving? What's not? Where is there hidden risk? What's the market missing or not pricing in?
One of the things I brought up is: "Is anyone paying attention to this breakout in Apple?" I hadn't seen or heard much chatter about it and it seems to me few are aware this is happening or thinking through the implications of what this might mean for the broader indexes.
The team did highlight the move in our recent Monthly Conference call, so it's not happening in a vacuum. But it feels that outside our walls, few are paying attention.
