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All Star Charts

Expert technical analysis of financial markets by JC Parets

Winners Don’t Sell Winners

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One of the things I’m trying to be better at this year is letting my winners ride.

In the past, I would often look to reduce my open risk in a winning trade too quickly because I was fearful of giving back hard won gains. I would let my emotions or my PnL dictate when I should exit a portion of a winning position.

Letting my emotions dictate anything is often a recipe for disaster – certainly for me.

Emotions are not an objective reason to exit a trade. We need to let PRICE tell us when our trades are invalidated or vulnerable. Price doesn’t lie, but emotions often do.

Easier said than done. Especially right now. [Read more…]

[Options] A 16-Year Trend Has Been Broken

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Healthcare continues to lead to the upside. While we already have a bullish bet on a sector ETF, it’s time for us to drill in a little deeper in search of more beta if this trend is going to continue.

Today’s trade is in a name that has been performing great off its December lows and has also been in a longer-term bull market. But only just recently has it begun to outperform against the broader stock market.

Check out this chart of Merck $MRK: [Read more…]

[Options] Taking a Slower Approach to a Healthcare Rise

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Today on The Flow Show, me and Steve Strazza chatted about the current $VIX environment, the potential for sideways, volatile trading action, and our internally diverging views on the overall market (JC is getting more bearish, Strazza is still flying the Bull Flag, and I’m closer to Switzerland).

As we dug into it, Strazza floated a couple ideas in the Healthcare space that made sense to me once we fleshed it out. [Read more…]

[Options] Back to the Wells

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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. [Read more…]

Desperate Times Lead to Predictable Results

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For the past seven weeks, it was “do-or-die” for my favorite football team, the Buffalo Bills.

They came into the season as one of the favorites to make it to the Super Bowl. Las Vegas even had them at good odds to win it all for the first time in franchise history.

Of course, nobody can predict the future. Not in sports, not in markets, not anywhere.

And naturally, the real world had different ideas.

Twelve games into the seventeen-game season, it looked like all was lost and Bills fans would have to “wait ’til next year” once again. The Bills’ record was just 6-6 and they were looking up at 10 teams ahead of them in line for only 7 available playoff spots.

It looked like it was over. They faced a situation where their only real path to make it to the playoffs was to win their final five games. And those final five games were scheduled against a gauntlet of teams who were locks for the playoffs already — each with their own valid dreams of winning the Super Bowl.

But the Bills won against the Chiefs in Kansas City (I was there!). They beat Dallas. Then the Jets. Then New England. Finally, they finished off Miami to make the playoffs. And they continued the streak by beating their first playoff opponent, the Pittsburgh Steelers.

But this post isn’t about all that winning. It’s about HAVING to win.

The Bills put themselves in the unenviable position of playing MUST-WIN games for 5 straight weeks before entering the playoffs tournament which are also MUST-WIN games if one hopes to win the Super Bowl. All in, they would’ve had to win nine straight MUST-WIN games to become Super Bowl Champions.

Talk about long odds!

As the Kansas City Chiefs were running out the clock to eliminate my Buffalo Bills in this past Sunday’s game, I couldn’t help but think about the times I’d inadvertently found myself trading as if I HAD TO WIN.

Sometimes I was trading as if I had to win because I’d been on a terrible losing streak and I just wanted to get back to even. You might call this revenge trading. I’m not sure whether it was fear of accepting that I’d lost, or greed to get back what I viewed as “mine” that would drive me during these times, but I can tell you the end result was usually the same — more losses. [Read more…]

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Risk is Opportunity

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“The Iron Condor is a risky trade!”

This comment was shared today during my appearance on the Morning Show with JC and Strazza.

We were discussing this trade in $TSLA we put on yesterday.

Sure, this trade might have some risk in it. 

Newsflash: ALL trades have risk. If there was no risk, there would be no potential reward!

An Iron Condor is a four-legged options spread consisting of equal amounts of short out–of-the-money puts and calls, and long further out-of-the-money puts and calls that protect the position and define the risk.

Here’s the PnL Graph for the $TSLA trade and this is a pretty common structure for an Iron Condor trade: [Read more…]

[Options] “Gimme Something Sloppy!”

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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: [Read more…]

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