Google is making a run at a big fat round number - 1200 -- which would also be a new all-time high, and time is of the essence to get aboard what could be a rocket ship ride much, much higher. We don't have much time to waste so I'll just cut right to it.
When you talk about the fundamentals of these banks, then people get really scared, but there comes a certain point where that horribleness gets priced in.
I'm rarely, if ever, a bottom-feeder in the stock market. But knowing that $DB is just too big of a name to allow to go bust (I think regulators learned their lesson with Lehman Brothers?), it seems like a low-risk, potentially high reward play to dip our toes in the water in a risk-defined play to participate in a rebound.
Sector rotation has been a hot topic as this bull market keeps finding fresh legs to pull us higher. As we scan the entire marketplace looking for clues as to the next sector to wake up, we've identified the Home Builders as a viable option with some clearly defined levels to keep it simple.
Rotation is the big word that's got us stock market bulls excited around here. It seems every couple of weeks there's a new sector that takes the baton to lead the broader indices higher. And just when one sector looks like it might be running out of steam, another one shows up to take that baton further down the track.
How long until the track runs out of runners? We don't know, but we still see a lot of contestants lacing up their shoes. Either way, after such a great relay race, if you're concerned that the next runner has a higher than normal chance of stepping on a crack, but you'd hate to be sitting on your hands if he builds on the lead, then I've got a trade that I think allows you win in both scenarios.
Every morning I get to wake up and do what I want to do, not what I have to do. Life doesn't always work out that way, so I promise not a day goes by that I'm not incredibly thankful for the opportunities that I have. With a tremendous amount of luck and some hard work, I get to play in the biggest game in town, in every town. Throughout my career, most of my interactions with traders and investors came from living in New York for 15 years. Over the past 18 months, however, I've been traveling throughout Asia learning from investors who come from completely different cultures and bring brand new perspectives to my process.
It's difficult for me to write about these experiences because I truly don't even know where to begin. When I write blog posts and research about technical analysis, I can just tell you what I'm thinking. That's easy and enjoyable for me. But when it comes to really digging down into what the hell I just experienced on the other side of the planet, it's not that simple.
It happens far too often: a game-changing company comes on the scene, has a massive run in its share price, makes a ton of people a ton of money, and becomes a media darling with constant, breathless stories about this exciting new widget maker.
But then the sideliners who sat with their hands in their pockets begin to grumble about how "the stock is overbought", "it's going to crash," "the founder is a fraud," "this company is a scam," etc. No skin in the game, just bitter about not participating. It seems in recent years, Tesla (and it's founder Elon Musk) has been the poster child for this phenomenon.
The Technology sector ETF $XLK in recent months has overtaken its previous highs set in the year 2000. For anyone that was trading during that time, you know that breaking these levels is a big deal. Do you think 18 years of reclaiming former highs is going to stall right here? I don't.
But maybe you think this week's stretch break higher is a little much and while you're bullish too, perhaps you're more cautiously so in the near term? I don't entirely disagree. Thankfully we've got some well defined levels to trade against while seeking to earn some income.
Technology stocks continue to lead the broader markets higher, and that still keeps us at All Star Charts bullish on stocks. How can you not be when technology has such an important weight on the indexes?
JC recently drew attention to the leadership in the Payments Processing space. It seems that nearly every chart of every major company in the sector looks insanely bullish. And it's hard to argue when you look at names like Visa ($V), Mastercard ($MA), Global Payments ($GPN), Paychex ($PAYX), and Square ($SQ).
But my attention is squarely focused on an opportunity in Paypal $PYPL and here's why...
It's very easy to get caught up in the day to day noise of the market, especially if you're allowing toxic media content into your life. It's virtually impossible for us to completely ignore it all, although I do try my best. So, at the very least, we want to be aware of what type of content we're consuming and the conflicts of interest that are driving it. But another, and much easier way to avoid getting lost is simply by taking a step back. Monthly charts allow us to see the forest through the trees and is one of the most valuable parts of my entire process.
Even if you're a day trader or short-term swing trader, I think it's a huge advantage to understand the direction of the underlying trends. For me, who specifically looks out weeks and months, trying to make money this quarter, my monthly candlestick chart review is essential. I can't begin to tell you how much this has helped me avoid blindly calling tops or bottom fishing in never ending downtrends. It most certainly helps us err in the direction of the underlying trends which, of course, increases our probabilities of success.
The $XLE Energy Sector ETF is currently scoring one of the highest implied volatilities relative to it's biggest ETF peers. Sure, it's warranted as price action has been a bit erratic of late. And we can argue about the politics and economics behind the moves and what they all mean. But I'll leave that to another guy who doesn't value his time. All I care about is putting myself in trades where an edge exits.
And when IV is priced high, these are often great opportunities to hunt for credit spreads.
So it seems a strong US Dollar has been bad for global stock market ETFs due to local currencies exposure. This has damaged the bullish trends in otherwise strong economies and the team here at All Star Charts has been looking to identify the global ETFs that are holding up best and likely to lead when currency headwinds abate.
A favorite to lead the charge is the iShares Emerging Markets ETF -- $EEM. Tom Bruni likes the bull thesis here, but I'm not so sure it'll be that easy. Have no fear, I've got the perfect way to play our contradicting opinions with options.
