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.
The bull market continues, and the broadening out of participation continues to widen. Today's trade is in a Chemicals company that is beginning to show some relative strength and has two upside targets that could potentially be met, if conditions cooperate.
We'll reduce our position as the closer target, and hold the rest for a run at the big prize!
It was remarked during our Analyst meeting this morning that "bullish Wells Fargo" is a phrase that hasn't been uttered within our digital walls in a long, long time.
But we're looking to get more exposure to the banking sector, and $WFC is consolidating nicely after a fresh breakout last week. With all-time highs within bull market distance, we feel like we can get aggressive with this name for a run.
Implied volatility in $WFC call options is pretty tame here, so that affords us the luxury of going out six months to play the June options which will give us plenty of time to see if $WFC has the stuff.
One of the things we like to do repeatedly at All Star Charts is position ourselves in leading stocks in leading sectors. Just writing that out may sound completely obvious to some, but too often I see traders trying to get cute to find the "undiscovered gems" that will be the next big winner.
Call me old-fashioned, but I prefer getting involved in stocks that are already doing what we want them to do, and I want to let inertia take over.
Today's trade in Southern Copper is one in which both inertia and "magnets" may play a part in delivering gains to us.
Short-term traders will classify today's trade as a "hard trade."
We're positioning in a stock that has already had a significant run over the past two months. But if we widen out our lens and look at weekly or monthly candles, we'll see that this stock is making fresh all-time highs out of a monster base which can fuel a dramatic push higher.
Spotify is trading in the spot where we can get paid on follow-thru back toward all-time highs. But we don't necessarily need it to get all the way there for us to earn profits on today's trade.
The speculative juices are returning to the cryptocurrency space, and the bulls are starting to reemerge from the shadows as Bitcoin, Ethereum, Solana, and many of the smaller (MOAR!) speculative names are starting some eye-popping gains.
As equities traders, we don't have a proper spot ETF to play anything in the crypto space, but the closest thing we have is Microstrategy $MSTR.
So we're going to use this vehicle to make a speculative bet on a potential upside-down waterfall move in Bitcoin.
Today's trade has me thinking of this classic corny joke from Pulp Fiction:
One of the strongest sectors out there right now is banking. Particularly regional banks. And as we head into year-end, the catch-up trade is real and money managers chasing alpha are looking into some beaten-up names in the regional banks to get the juice they need to make their year.
This plays in favor of today's trade which has a yawning gap to fill which is likely to overshoot on the upside if a broader market melt-up is in the cards (narrator: we think it is).
