We got stopped out of a Wells Fargo trade a couple of weeks ago, and it looks like that was the whipsaw it needed to shake weak hands out. And since I was shaken out, I consider myself among the weak hands squad. I'm ok with that.
But given what we've seen since we were stopped out, we're getting back in for another try. This time, with tighter risk management and a longer runway.
The entire All Star Charts team is presently in NYC hosting our Portfolio Accelerator event. So I will skip the preamble and get right to the point for today's trade in $TSM...
The housing sector continues to perform well, and it makes sense that companies in the mortgage business should come along for the ride.
One of those names had a big push into the end of the year, and then had a monster pull back to start 2024. We think this reversal may be a bit overdone and the stock is now at a level where we can take an advantageous position with minimal downside from here.
Look what we have here: a $VIX popping its head up to two-month highs.
Are investors getting a little spooked by the prospect of a tricky earnings season?
We'll be able to figure all that out after the fact. In the meantime, we will use these elevated options premiums to help us ride out some portfolio profitability.
I asked my analysts to find me a big cap name that is trading sloppy.
And the one they came with is a widely followed mega-cap name that has been flopping around in a sideways choppy range which, coupled with upcoming earnings, is helping to juice options premiums.
Here's everyone's favorite EV car maker Tesla $TSLA:
Don't let today's headline scare you. I'm still bullish overall.
But with the S&P500 still bumping its head against overhead resistance, it wouldn't hurt to provide a little ballast for a mostly long portfolio here.
So with this in mind, I'm putting on a bearish trade in a stock that has not been participating in this bull market, and will likely continue to push lower as long as the broader indexes keep struggling here.
Today's trade is in a name that many American shoppers are familiar with.
You've probably seen TJ Maxx stores everywhere, frequently located in strip plazas throughout the suburbs. And there's a good chance your family has dropped some loot in there, taking advantage of the deals they are famous for.
JC commented today that he's invested in $TJX in his long-term account as a hedge for his wife's spending at this store. I think many of us can relate.
But what's got me most excited about this setup is the recent base just below $100, which would be an all-time high. Around here, we call that the hundred-dolla-roll, and it's one of my favorite setups:
Sorry if today's blog title is a dated, obscure movie reference. I can't help myself sometimes.
But today's setup is no joke. We've got a stock that's a little off the mainstream path, which makes me like it even more. Stocks like this, which few have heard of, can sometimes quietly move higher. And then this slowly draws more attention (and buyers) to it, which helps our position.
Healthcare is an early leader out of the clubhouse to start the year. We've already seen some big moves in names like Merck, Amgen, and Lilly.
This is a sector rotation that makes sense to us. And for this reason, today's trade is in a name we think will play catchup to these leaders.
But first, lets zoom out to observe this chart of $PFE, highlighting the stock sitting near a level that has acted as strong support for numerous times over the past decade:
Today's trade is in a name that has caught the fancy of aggressive short-sellers. As of the latest update, approximately 25% of the outstanding shares in Chewy Inc $CHWY are held in short positions.
Now, I'm sure the short-sellers have done their homework and have very compelling reasons to be short. I will concede their points to them.
However, short-sellers are human too. And being human means they can also be wrong. And if they are wrong, the only way they can make the losses stop is to buy stock to cover their short positions. If 25% of the float has to cover their shorts, that sets up the possibility of a wildfire to the upside.
