Since we launched Allstarcharts Indiain January, we've seen great traction and have gotten a lot of feedback and suggestions from our readers and subscribers. In fact, many of the ideas we've added to the platform and are currently working on have started from conversations with you all.
A major part of the thesis for higher prices in Canada was the breakout in Financials (and REITS) which represent roughly a third of the TSX Composite, however, over the last few weeks we've seen failed breakouts in many of these leading stocks.
In this post I'll highlight some charts identified during my Chartbook update that describe the type of environment we're in for Canadian stocks and why a more neutral stance appears appropriate. Given the correlation between equity markets around the world, I'd also encourage you to read some of our other free pieces about the US here, here, here, and here.
After last week's move to the downside I figured there would be a lot of changes to the IBD 50, and there were, so I want to highlight the characteristics of some names that continue to hold up well.
For most of the year we've been talking about downside in Bonds and the potential effects that would have on Equities and Commodities. With rates extending their gains to start the fourth quarter, we're going to use this post to look at the structural trends in Commodities and determine which are best positioned to benefit if we start to see money rotate.
Gotta love it when the market hands us a little two-way action to remind everyone that stocks go both up and down. And more importantly, I get real excited when I start to see options premiums rise thanks to irrationally freaking out market participants. Is the top in? I don't know and neither do you (my gut says no), but there are plenty of people starting to buy protection in the options market to protect their positions. We'll happily take the other side of those insurance bets.
From time to time I like to review some of my Best Practices for my own benefit, but also for the benefit of readers of this blog, and for subscribers to All Star Options. So let's get right to it...
This past Friday marked an important monthly date in the regular cycle of options expirations. Friday marked the line in the sand where we crossed under 21 days until October expiration.
Why is 21 days until expiration important?
In short: because of theta and gamma.
For long premium positions, theta decay starts to become a major drag, and increasingly so with each passing day. For short premium positions, gamma has the potential to produce wild swings in your position equity. Neither of these scenarios are very appealing for obvious reasons.
Lets breakdown the risks and actions to take for a variety of common strategies.
We were bullish on Microsoft all summer, and with $MSFT printing another new all-time high this week, our stance hasn't diminished in the least. The only thing that's changed is we've raised our price target. That tends to happen in bull markets.
In our October conference call for subscribers, we teased a bullish trade idea in $MSFT. And upon further reflection, I think I've come up with an even better probability play with an opportunity for better risk adjusted returns.
As the Technology sector goes, so often goes the market. And the Tech Select Sector ETF $XLK has been going nowhere -- increasingly so -- over the past several weeks.
Does anybody here think broader market indices go sideways from now until the end of the year?
Yeah, I didn't think so.
If, or rather when, indices start busting a move, we're pretty confident that the technology sector will have a major say in the direction and pace. And we've got a plan to participate, whichever way it goes.
There are tiny little irrelevant markets everywhere like Pot stocks and Crypto Currency. These could disappear tomorrow and it won't matter. The sovereign wealth funds, hedge funds and other monster institutions that make markets move have to be in the bond market. They're too big not to. So if you want an inside look at the money flow from one place to another, an intermarket approach really helps.
I've been a lonely stock market bull for most of this year. It feels like every time I've told people that I think we're closer to the beginning of a bull market than the end, they think I'm crazy. That reaction has gotten me even more bullish. Not only does price continue to suggest we're heading much higher, but sentiment and positioning points towards the same.
I've made the argument that Technology is going to take us much higher, as it is just now finally breaking out above the March 2000 highs. It took 17 years to digest those 1990s gains. We're now just moving on. All that market cap getting going is one obvious catalyst that I've been talking about since last year.
I started taking wine a little more seriously over the past couple of years. It's been fun to learn about different varietals and the countries that grow them best. The geography is really interesting and it's fun to go visit places like Tuscany and Bordeaux. The whole process has been rewarding in a lot of ways. When you're at a nice restaurant, for example, you want to make sure you choose the best wine that's going to work best with your meal for your specific palate at your individual price point. Being able to explain your preferences and have an intelligent conversation with the Sommelier helps you do that.
