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All Star Charts

Expert technical analysis of financial markets by JC Parets

Pre-Election Years = 80% Hit Rate after down Mid-terms

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Doing some basic math, the odds continue to favor a strong year for stocks in 2023.

There are some people out there who think the Nasdaq is the stock market. There are others who “only buy growth stocks”.

I don’t know what kind of masochist you need to be to think that way, but both of those are very foolish approaches to life.

The Nasdaq is full of growth stocks. And growth stocks historically underperform and make little progress when interest rates are rising. I’m not sure if you heard, but interest rates have been rising!

Since the Stock Market bottomed in June, the majority of stocks and sectors are up and to the right. It’s only the biggest losers that are down, and there aren’t that many of them. It’s really just those nasdaq / growthy stocks that the masochists are focused on.

From a seasonal perspective, Pre-election years are historically some of the most bullish years we have in the market. Here’s what the 4-year cycle looks like as we head into 2023: [Read more…]

The Time and Place for a DXY Rally

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From the Desk of Ian Culley @IanCulley

I’m not big into seasonality.

I pay attention to it, of course. But it’s not in my top three data points after price. 

Don’t get me wrong, seasonality brings context and enhances awareness of any given market – which should be a priority for any trader or investor.

I have multiple almanacs on my desk, including the Stock Trader’s Almanac by Jeff Hirsch and Christopher Mistal and the Spectra Markets Trader Handbook and Almanac by Brent Donnelly and Justin Ross.

I recommend both.

Like most indicators, extreme seasonal tendencies provide the best information. And I can’t ignore the strong positive seasonality for the US dollar as it enters its best month of the year.

[Read more…]

In a Flash, It Can Be Gone

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Happy New Year, everyone!

I am incredibly excited for 2023. And for today’s note, I am in the middle of preparing to tell you one of the biggest reasons why I’m so excited for this year. It’s a productivity hack that is already taking my personal trading to a whole new level, but it extends to everything outside of trading — work and life – as well!

The plan was to finish up that piece and share it with you today.

However, it’s going to have to wait until another time. For now.

Everyone with a pulse who is aware of what transpired in the NFL football game last night between the Buffalo Bills and Cincinnati Bengals was knocked in the teeth by a heavy dose of reality.

The reality is that no matter how well we plan and strategize, no matter our confidence level, and no matter how well-positioned we might be to succeed in following our dreams, we have to be ever-vigilant and mindful of the very unsettling fact that it can all end tomorrow. Or even today.

The need for being mindful and grateful for everything we have and cherish should be pretty obvious as it pertains to our families and our life outside of the trading screens. You don’t need a long sermon on that from me.

As for trading – which is what many of you do read these notes for my insights on, and I’m grateful for – it’s also (another) reminder to us that putting ourselves in a position to win also means doing everything in our power to prevent catastrophic loss.

Losing sucks and it’s part of the game. It’s the cost of doing business. We can never erase losses from being a part of our daily interaction with the markets. But it only takes one large loss to take us out of the game forever.

We cannot allow this to happen.

Here is a non-exhaustive list of ways (in no particular order) that we options traders can prevent the risk of catastrophic loss:

  • Trade small.
  • Trade with defined-risk positions (long options, debit spreads, Iron Condors) and be comfortable with losing everything we risked in this one trade.
  • When trading naked short options, trade even smaller than normal and manage our risk like a momma bear protecting her cubs.
  • Leave a significant portion of our trading capital in cash.
  • If we’ve hit a long string of losses, take a break. Nobody is forcing us to trade.
  • When in doubt, get out.

The best predictor of future success in this business is time. The more time we have to put into it, the more time we’ve experienced it, and the more time we’ve learned about it through reading, mentorship, and community, the better our odds in the long run. But no matter what, we have to REMAIN IN THE GAME. We have to do whatever it takes to make sure we’re ready to take the field for the next play.

Godspeed, Damar Hamlin. Get back to whatever brings you the most joy – whether it’s family, friends, or way down the list… football – as soon as possible. Much love, my man.

~ @chicagosean

Follow the Flow (01-03-2023)

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From the Desk of Steve Strazza @sstrazza and Alfonso Depablos @Alfcharts

This is one of our favorite bottom-up scans: Follow the Flow.

In this note, we simply create a universe of stocks that experienced the most unusual options activity — either bullish or bearish, but not both.

We utilize options experts, both internally and through our partnership with The TradeXchange. Then, we dig through the level 2 details and do all the work upfront for our clients.

Our goal is to isolate only those options market splashes that represent levered and high-conviction, directional bets.

We also weed out hedging activity and ensure there are no offsetting trades that either neutralize or cap the risk on these unusual options trades.

What remains is a list of stocks that large financial institutions are putting big money behind.

And they’re doing so for one reason only: because they think the stock is about to move in their direction and make them a pretty penny.

Then we flip through our list of stocks flashing unusual activity and pick the best setups using many of the same technical filters we do for our other scans.

And, just like that, we’ll follow the money flow and fatten our own pockets along with some of the world’s most powerful financial institutions.

[Read more…]

The Minor Leaguers (01-03-2023)

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From the desk of Steve Strazza @Sstrazza

Welcome to our latest Minor Leaguers report.

We’ve had some great trades come out of this small-cap-focused column since we launched it back in 2020 and started rotating it with our flagship bottom-up scan, Under the Hood.

For the first year or so, we focused only on Russell 2000 stocks with a market cap between $1 and $2B.

That was fun, but we wanted to branch out a bit and allow some new stocks to find their way onto our list.

We expanded our universe to include some mid-caps.

To make the cut for our Minor Leaguers list, a company must have a market cap between $1 and $4B.

And it doesn’t have to be a Russell component — it can be any US-listed equity. With participation expanding around the globe, we want all those ADRs in our universe.

The same price and liquidity filters are applied. Then, as always, we sort by proximity to new highs in order to focus on the best players.

The goal is to catch the strongest names while they’re still small and have serious upside potential. If any of these stocks ever climb the ranks to the big leagues, the returns could be huge.

We’re looking at up to 10x moves just to break into large-cap land!

Let’s dive into this week’s report and see what’s happening in some of the hottest stocks in the Minor Leagues.

[Read more…]

Well That’s a First…

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What a year, eh?

The S&P 500 posted its worst return since 2008!

I think it’s fair to say that if your portfolio survived 2022, you’re doing a great job.

You even outperformed most funds and equity managers. Just think how well you can do in a more favorable environment.

To that point, just because it was a bad year for markets doesn’t mean it had to be a bad year for YOU.

[Read more…]

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