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All Star Charts

Expert technical analysis of financial markets by JC Parets

All Star Interviews Season 3, Episode 16: Chris Cain, Senior Quantitative Researcher at Connors Research

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On this episode of the podcast I’m really excited to bring in Quantitative Researcher Chris Cain. Chris found his love for building trading systems while he was a market maker in the bond market for over 10 years. Today he works with Larry Connors and just published a book called The Alpha Formula that you can purchase at a discounted price at Tradingmarkets.com. (Use the Promo Code: “TAF2020” to get the book at half price!) We laugh during the podcast that Chris is so hardcore about this stuff the he actually teaches a course in Python specifically for traders and building strategies. His goal with these systems is to recognize and take advantage of our human behavior flaws so we go over a bunch of those, which I always think is helpful. He also walks through one of the 4 models and explains how having several uncorrelated strategies increases risk adjusted returns. This was a really fun conversation with one of the smart ones!
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The John Elway of S&P Sectors

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We don’t have bull markets in America without Financials participating. That’s just how it is around here.

I look through a lot of charts, as you guys know, and there are always a few that really stand out and explain the current situation. I’ve pointed out how there is further potential of overhead supply for stocks at these levels, particularly internationally. That means that, for the most part, the market has proven that there are more willing sellers than buyers around here. You can’t see it if you’re just looking at S&Ps and the Dow. But when you go sector by sector and country by country, trust me, it’s there.

So bringing it back to America, Financials are in quite the predicament. You can’t have a success story without an original struggle right? Well this $31 level has been an issue since the epic top in 2007 before the financial crisis: [Read more…]

Mystery Chart (02-04-2020)

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From the desk of Tom Bruni @BruniCharting

New Mystery Chart!

For those new to the exercise, we take a chart of interest and remove the x/y-axes and any other labels that would help identify it. The chart can be any security in any asset class on any timeframe on an absolute or relative basis. Maybe it’s a custom index or inverted, who knows!

We do all this to put aside the biases we have associated with this specific security/the market and come to a conclusion based solely on price.

You can guess what it is if you must, but the real value comes from sharing what you would do right now. Buy, Sell, or Do Nothing?

[Read more…]

[Options] February Expiration Open Positions Review

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As February gets under way, it’s time to review positions with February options that remain open (haven’t already hit profit targets or been stopped out).

Most trades I put on for All Star Options tend to have a minimum duration of 30 days (short premium plays) and often as long as 6-8 months (for long premium plays). As options approach expiration, greeks like theta and gamma start to become my enemy and whipsaw my P/L. Therefore, as options and spreads get into the expiration month, my best practice is to put each position on notice — it’s time to take action.

February positions closed at profit target: $GDX (1/16)

February positions closed at a loss: $SLB (8/13), $LGIH (11/6), $MDT (10/23)

Remaining Open Positions (in order of entry):

  • $DHI Long Feb 55 calls: We entered this position in August at $1.60 per contract. We sold half of our position at $3.20 on October 17th. We’re still holding our remaining position and the calls are currently in-the-money. The level I’m currently watching is 58.50. If $DHI closes below that level, I’ll close my position and whatever I get for those calls represents our total profit in the trade. If we hold these levels, I’ll next look to raise my stop loss level if/when $DHI breaks out to further new highs (above 61.77).
  • $ABT Long Feb 90 calls: We entered this position in October at $1.20 per contract. We sold half of our position at $2.40 on January 22nd. Our timing on that exit was fortuitous as that date currently marks the high for the move. Unfortunately, our remaining calls are now out-of-the-money and theta is now our enemy. We’re closing out these calls here (currently bid 45 cents) and whatever we get represents our total profits in this trade.

If anybody has any questions, hit me here.

~ @chicagosean

Allstarcharts Weekly: Rotation Into Fixed Income

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In this Episode of Allstarcharts Weekly, Steve and I discuss all the reasons why we’re buying bonds right now instead of stocks and commodities. The big point here for me is that it’s not just one chart. There is no single holy grail suggesting we buy bonds. This is a weight of the evidence conclusion. It’s not one chart, it’s hundreds of them all pointing to the exact same thing: Sell stocks and Buy bonds!
[Read more…]

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