If you've been paying attention, we've been bullish and long Nike $NKE for a little while now. Here's our trade from July 2 where we got long calls (still holding), and here's our more recent trade where we are fading the hysteria and elevated vol from September 11th. Well, sometimes we're a sucker for what works and often go back to the well. With that in mind, we've identified some similar action in Pfizer $PFE that has us interested and is pretty compelling.
It feels good to be back in California. I just spent the past week in Texas, and before that I was in Toronto and Philly. I won't be leaving the west coast for a few months and I couldn't be more thrilled about it. I like it here.
When you force yourself to leave to computer screen as much as I do, you'll quickly learn the value in getting away and then coming back to reevaluate everything you previously thought before you left. There is a lot of data waiting for you once you're back at the desk. Is there enough data to change your mind or does it just confirm what you felt previously?
I spent last weekend, both Saturday and Sunday, looking through charts and enjoying the start of Football Season. At this point, College and Pro Football have each begun. Back when I lived in New York, this was my favorite time of the year: September and October. The weather is the best and everyone is back from their weekends in the Hamptons, Jersey Shore, Cape Cod or various other northeast vacation spots. The city gets going again. But so do the markets.
Consumer Staples have been going up. Stocks like Costco, McCormick and Clorox have been ripping to new all-time highs. The Sysco in the Staples sector has even embarrassed Cisco in Technology. It's been a nice run. The question here, however, is whether or not the strength in Staples is evidence of a flight to safety and whether we should be concerned about the overall market? This is a very important question and I want to walk you through my thought process.
This is easily the most valuable exercise I do each month. It takes me half an hour, just 12 times a year. It's the best 6 hours I'll spend in 2018. It helps eliminate the noise by forcing us to only look once a month. It brings us home, to the primary trend. It's easy to get lost in the daily rhetoric. This part of the process helps us completely ignore that garbage and focus on what matters.
Here's what we got this month:
We'll start with the Dow Jones Industrial Average as it tries to make a move above 27,000. There's been trouble just below that from the extension target of the 2007-2009 decline. This retest of former highs comes at a time where the Dow Jones Transportation Average is already in the process of clearing. First, here's is the Industrial Average:
Last week I wrote about the Canada's Energy markets to introduce our new Canadian Chartbooks (Major Sectors & Indices and TSX 60). In today's post I want to focus on the Banking and REIT sectors, which are showing relative strength and continue to offer opportunity on the long side. Not to mention I've been itching to use this Toy Story pun as a title since JC hired me.
First let's take a look at the TSX Capped REITs Index vs the TSX Capped Composite. It's spent the last 2 years bottoming and is now breaking out above a confluence of resistance. If this ratio is above it, the bias is to the upside with a target at the '15-'16 highs.
This is the monthly conference call for Members of All Star Options. In this call we will discuss the current market environment and focus on price and volatility behavior. Throughout the session, J.C. Parets will add commentary on the technical outlook moving forward, and Sean McLaughlin will discuss the options strategies available to profit from the market activity.
This month’s Conference Call will be held on Thursday August 30th at 7PM ET. Here are the details for the call:
The Baseball-almanac calls the 7th Inning Stretch, "Perhaps the most mundane, yet physically rewarding moment of every baseball game". Over time, I've learned to respect this time of the stock market calendar year in a similar manner. The timing of it is very close too, as we approach about 2/3 of the way through the game, or year in this case.
I've found that it's a great time to reflect on the decisions we've made so far in 2018 and mentally prepare for the rest of the year. This period I'm referring to specifically is the week before Labor Day weekend and the week after. Things historically get back to normal around September 10th-11th.
Next up in the Bull Market Rotation Wheel of Fortune: Airlines.
The S&P 500 printed a new all-time high on Tuesday (Aug 21), so naturally we should expect a broadening spectrum of sectors and stocks participating to the upside. The airlines have been a bit of a laggard in the transportation sector, but appear as a whole to have put in an important base with many names starting to breakout to the upside.
We've got a play to take flight in one of the leaders.
My favorite one lately is when the bears tell people that US Stock Market Breadth is deteriorating. It's hilarious.
Their sorry excuse for a thesis has them suggesting that there are fewer stocks participating to the upside in the U.S. Stock Market, when nothing could be further from the truth. I've been pounding the table that we continue to see an expansion in participation, which is characteristic of an uptrend and we have wanted to be buying stocks very very aggressively. That has worked out well. See here, here, here, here, here, here and here.
On May 1st we spoke about seasonality and why the traditional "Sell In May and Go Away talk is a great headline, but not a great investment strategy this year. While most think that seasonality data is useful to position ahead of what are typically weak or strong periods, we find that the real signal occurs when the market does not adhere to its historical patterns. Now that we're a bit more than half way through the seasonally weak May-October period, we thought it'd be helpful to look at the market's performance thus far and see what it could possibly mean for the rest of the year.
I live in a funny world where I can just write some things on my phone or computer and people all over the world begin commenting on it. These conversations can last for months, even years. Those who know me understand that I try to do my very best everyday to look at the market as nothing but letters and math. It shouldn't matter whether we're long Apple or short soybean futures.
Some assets strike a cord with people and make them feel differently. There is usually a popular figure involved or hot product and sometimes even conspiracy theories. It's fascinating to watch. Gold is definitely one of those. The crazies come out whenever you mention gold, bull or bear doesn't matter. Natural Gas used to be like that 12-15 years ago, but not since it lost 90% of its value over the past decade. This one is the bitcoin of energy.
