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This Week's Watchlist: Asset Shortage

October 18, 2021

There is more money being allocated to risk assets than there are risk assets to feed that demand.

It's not about the Fed, or the Trump or the COVID.

Prices go up when there's more demand than supply for assets. And that's what we see.

Here's exhibit A. Crude Oil is making new 7-year highs.

And why do you think that is happening? Is it because there's more supply of oil than there is demand for it? Or is it because there is more demand than supply?

You can complain about higher oil prices, or you can celebrate. You get a choice in this country.

Which one will you be?

I'd rather be celebrating with friends and family that we're all paying twice or even 3 times the price at the pump!

You can always check out the list of my favorite trade ideas here.

Also check out this Canadian Integrated $CVE: If we're above 11,...

[Options] My Favorite Strategies: Short Strangles

October 18, 2021

(While on vacation until Oct 26th, I’m going to be sharing some anecdotes on my favorite trading strategies: why I use them, when, and how I manage them once they are on.)

The majority of trades we do here with All Star Options tend to be directional in nature. And why not? We're leveraging best-in-class technical analysis to give us an uncommon edge to participate in emerging and/or continuing trends. And if we know anything as Traders, we know that if we have an edge, we should attempt to execute against that edge as often as possible.

Meanwhile, I recognize there is an entire cottage industry around "selling options premium" and for good reason -- it works! That doesn't mean it always works nor does it mean it's easy. I just don't like to make it my only thing.

That said, one of my favorite strategies is to sell premium via Short Strangles.

What Bubble?

October 17, 2021

I agreed to give a presentation Saturday morning about Crypto Currencies.

But if you've seen me walk through my charts in the past, you know I have a hard time sticking to one asset class.

If we're talking about stocks, how can we do that without talking about the bond market?

If we're talking about Commodities, how can we have a serious conversation without including interest rates?

And if we're talking about Crypto Currencies, how can we not include the bank stocks with Crypto exposure, who are benefiting from both rising crypto prices AND rising interest rates?

Well, that's what happened Saturday morning.

A conversation that was supposed to be about Crypto, turns into an all out blitz of rising asset prices due to an asset shortage that we're seeing worldwide.

The reason risk assets are going up in price has nothing to do with the economy, or...

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Saturday Morning Chartoons: Risk Assets Soaring

October 16, 2021

It's Saturday Morning Chartoons time. 

This is the weekly post that aggregates all the charts we put together throughout the week and organizes them all into one, easy to flip through deck.

You can find the whole list of trades here.

Below you'll find the full PDF of this week's charts:

 

 

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International Hall Of Famers (10-15-2021)

October 15, 2021

From the desk of Steve Strazza @Sstrazza

Our International Hall Of Famers list is composed of the 50 largest US-listed international stocks, or ADRs.

These stocks range from some well-known mega-cap multinationals such as Toyota Motor and Royal Dutch Shell to some large-cap global disruptors such as Sea Ltd and Shopify.

It’s got all the big names and more -- but only those that are based outside the US. You can find all the big US names on our original Hall Of Famers list.

The beauty of these scans is really in their simplicity.

We take the 50 largest names each week and then apply technical filters in a way that the strongest stocks with the most momentum rise to the top.

Let’s dive in and take a look at what some of the largest stocks around the world are doing.

Here’s this week’s list:

And here’s how we arrived at it...

  • We filtered out any names that...
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Confirmation From Dr. Copper

October 15, 2021

From the desk of Steve Strazza @Sstrazza and Ian Culley @Ianculley

Copper was a critical piece missing from the intermarket puzzle heading into the fourth quarter.

Just last week, copper was testing year-to-date lows and looking vulnerable for a downside break. Meanwhile, energy futures and interest rates were rising, and cyclical and value stocks were getting back in gear.

The mixed signals were impossible to ignore. It’s not likely that the recent breakouts in crude oil and the US 10-year yield would hold in an environment where copper is breaking down.

Dr. Copper is a great leading economic indicator and critical to the global growth narrative. Let’s see what it’s saying.

Here are two ways we were looking at the copper chart:

We were wondering whether this was a major head-and-shoulders top or just a continuation pattern that would...

Gold: Don't Call It A Comeback!

October 13, 2021

Those angry little gold buggers are finally starting to put some points on the board.

The lack of participation in Gold since last Spring has been something to witness. Every commodity on earth has skyrocketed, except for gold and other precious metals.

My argument is that maybe it's behaved that way because it's not a commodity. Maybe it's more of a currency, something I've always argued.

Right or wrong, call it whatever you want, it has done poorly since last summer of 2020.

And with the Dollar as strong as it's been, Gold has really taken a beating.

But not lately....

Can we call it a comeback?

You see, with new highs in the US Dollar this month, Gold did NOT make new lows. That bullish divergence is the first sign of life we've seen out of this thing for a while.

Here we're looking at the...

[Options] My Favorite Strategies: Long Calls

October 13, 2021

(While on vacation until Oct 26th, I'm going to be sharing you some anecdotes on my favorite trading strategies: why I use them, when, and how I manage them once they are on.)

Here's the thing about options trading: you can make it as complicated as your heart's content. And there are plenty of incredibly smart practitioners out there who run amazingly complex strategies involving all kinds of volatility and statistical arbitrage.

They analyze 3D volatility surface graphs, use lesser understood greeks, and interpret things like "volatility smile" and dispersion.

If that works for you, great! I always say: if it works, do more of it!

But another beautiful thing about options trading is that there are many different ways to pull profits out of the market, and most of them aren't as complicated as they may sound -- even if the strategies have exotic sounding names like "iron condor" or "broken-wing butterfly."

And my absolute favorite options strategy isn't even really a strategy at all -- it's simply buying long calls when I'm bullish!

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The Bond Market Reaches for Risk

October 13, 2021

From the desk of Steve Strazza @Sstrazza and Ian Culley @Ianculley

We’re beginning to see signs that risk-on behavior is re-entering the market.

Commodities are ripping in the face of a rising dollar.

Cyclical stocks are back in gear as the S&P 500 High Beta ETF $SPHB posts higher highs and higher lows relative to its low-volatility alternative $SPLV.

Meanwhile, classic risk-appetite barometer AUD/JPY sliced through a critical level of former support-turned-resistance earlier this week.

All of these point to an increasing risk-on environment. 

But what does the bond market have to say about investor positioning toward risk?

Let’s look at a couple credit spreads that speak to investors’ willingness to incur risk.

First, we have the Investment Grade Corporate Bond ETF $LQD relative to the US Treasury Bond ETF $IEF:

Investment-grade...

[PLUS] Weekly Sentiment Report

October 13, 2021

From the desk of Willie Delwiche.

Key Takeaway: Optimism has been unwound, but pessimism remains scarce. We have yet to see a level of fear associated with a complete unwind in sentiment. Still, risks loom overhead with earnings season heating up and the prospect of disappointing news on the horizon. The tailwinds that have accompanied the market for the past 15-months have dissipated. Analysts no longer revise expectations higher, and breadth is weak with more new lows than new highs across the NYSE and Nasdaq combined. Caution could quickly turn into nervousness and fear without a supportive backdrop in the event less than stellar news ushers in price volatility. It’s important to remember that sentiment resets slowly then all at once. We’ve been through the slow part. Now it’s time to see if the market can withstand a potential bout of disappointment.  

Sentiment Report Chart of the Week: Growth Expectations Making the Turn

Earnings season gets plenty of attention - most of it (in my...

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Young Aristocrats (October 2021)

October 13, 2021

From the desk of Steve Strazza @Sstrazza

Dividend Aristocrats are easily some of the most desirable investments on Wall Street. These are the names that have increased dividends for at least 25 years, providing steadily increasing income to long-term-minded shareholders.

As you can imagine, the companies making up this prestigious list are some of the most recognizable brands in the world. Coca-Cola, Walmart, and Johnson & Johnson are just a few of the household names making the cut.

Here at All Star Charts, we like to stay ahead of the curve. That’s why we’re turning our attention to the future aristocrats. In an effort to seek out the next generation of the cream-of-the-crop dividend plays, we’re curating a list of stocks that have raised their payouts every year for five to nine years.

We call them the Young Aristocrats, and the idea is that these are “stocks that pay you to make money.” Imagine if years of consistent dividend growth and high momentum & relative strength had a baby, leaving you with the best of the emerging dividend giants that are outperforming the averages.

By adding our...