In today's Flow Show, Steve Strazza highlighted the strength we're seeing in the homebuilders sector. I immediately liked it because I don't have any homebuilding stocks in my portfolio, which needs to be corrected.

Last week, Lennar Corp $LEN released earnings, and the market pretty much yawned. I like that. Because the other name that we liked better -- D.R. Horton $DHI -- hasn't yet released earnings (scheduled for July 18th) and unless they come out with something truly shocking, my bet is the market will be similarly unfazed. This tells me there's an opportunity to take advantage of some overpriced options premiums currently being bid into $DHI options.

Flying down a mountainside on two skis while negotiating tight turns and ever-changing microclimates would be a terrible time to lose focus.

Todd Gordon knows this. If he hadn’t quickly learned this skill in his journey to competitive ski racing, he would’ve likely landed himself onto a stretcher and an air-lift back to base.

There was no other choice. 

But for Todd, he’d have it no other way. From a young age, when he found an interest in something – whether skiing or finance – he’d go all in. Nothing else mattered.

And when he discovered the world of trading, he knew what he wanted to do. “There was never a question,” he said.

In college, between classes, skiing, and happy hours, Todd would trade options from his dorm room. It wasn’t a matter of IF he would be a trader, it was a matter of where would he start.

And that answer came right after college when at the age of 22, Todd headed west and joined a proprietary trading group based in San Diego. And from there, he never looked back.

In fact, it's not even called General Electric anymore. The company is now called "GE Aerospace."

I bring this up because the analysts had a debate today on whether or not $GE stock bumping up against levels not seen since the Great Financial Crisis even matter. Is it even the same company today as it was in 2008? The unequivocal answer is no -- it is not the same company.

Regardless, the only thing that really matters to us is the price action and its hard to ignore the run $GE has been on over the past eight months.

Check out this chart:

In today's episode of the Flow Show, Steve and I navigate some trade ideas that would help add bearish portfolio diversification in case the stock market wants to catch its breath this summer.

We discussed two specifically ugly charts, and we both agreed that Block Inc $SQ offers the best opportunity as an options trade.

Watch the video above for all the color you need.

Here's the chart for $SQ:

The recent stock market rally is being led by the mega caps. And there's no reason to think this isn't going to continue for the foreseeable future.

I'm currently under-allocated to the biggest capped names. So today's trade is an attempt to rectify that.

The Bull Market is back, baby!

At least, it sure looks that way at the index level as the biggest of the big caps begin new legs higher.

Though, curiously, the two short positions I have on are also showing signs of working out for us.

With $VIX readings continuing to remain low, most bullish bets I’m looking at involve buying options premium since it is quite affordable in this environment.

In this week’s portfolio review, I fielded an important question: “What’s an appropriate account size for trading options?”

Of course, there is no one-size-fits-all for options accounts. But I get into a number of considerations to mull over to determine what is the right size for you.

Check it out:

Here's another trade for the "Hard" file...

It's "Fed Day." So I'm not interested in putting on any trades that might be material affected by any post-fed reaction. But I did find one that is trading in it's own universe, divorced from whatever may or may not come out of Washington.

This is a trade that will be hard for many people. Not hard to execute, just hard to comprehend the why?

Some people will look at the chart and be afraid of a pullback.

Some people will see that it's a $4 stock and say: "no thanks."

Others will hate the sector it's in.

OK, the title of this note is a little tongue-in-cheek.

But let me explain.

I’m a rules based trader. I’m nothing without my rules. Without rules, I’m just a trader pissing in the wind, driven in multiple directions by my volatility and ever-changing emotional reactions to my intraday PnL.

That’s no way to live.

Once I committed to being intentional about every trade I put on, my trading jumped to a new level. This process includes a thoughtful rationale for my thesis, position sizing, stop loss, and profit-taking levels.

So these days, whenever positions are moving either for or against me, I take comfort in knowing that I don’t need to make any new decisions – even as my emotions tug at me to do something! I already know what to do because I laid it out in my original trading plan.

And for me, that works 95% of the time.

Why not 100%?

Because nothing is perfect. Not the setup. Not me. Not the rules. Nothing.

Occasionally, I need to use a little discretion. Thankfully, not often. But when I do, I do it from a position of strength.

In what has become pretty well documented over the past two years or so, our Uncle Warren Buffett has been accumulating a very large position in Occidental Petroleum $OXY. He's been making his buys in the neighborhood of $55-60 per share. Like clockwork, every time $OXY has traded below $60 per share, we see new Form-4 filings disclosing another large purchase by Berkshire Hathaway.

We at All Star Charts were a little ahead of the crowd on this trade, having sold puts numerous times in $OXY over the past two years at these levels to take advantage of elevated options premiums and the "Buffett Support Zone."

It's been a minute since I've bought anything on eBay. But, by the look of the chart, I must be the outlier as it appears there is still good business there and market participants appear to agree.

Here's what my Analysts had to say about $EBAY in a recent 2 to 100 Club report:

eBay is completing a rounding bottom reversal as it reclaims the 38.2% retracement level. This level has acted as resistance multiple times in the past, making it a great place to define our risk. If this breakout sticks, the primary trend is higher, and we want to be long against the 53 level.

On a relative basis, the stock is working its way higher out of a bearish-to-bullish reversal pattern versus its peers. If the reversal pattern is completed on absolute terms, we expect the stock to outperform its peers over longer timeframes.

We want to buy EBAY above 53, with a target of 64 over the coming 2-4 months.

Here's a visual of that chart: