From the desk of Tom Bruni @BruniCharting
In this post we’re talking about Orange Juice, which may not quench your thirst so stick around to the end for another great bonus chart.
Let’s get into it.
The John Elway of S&P Sectors
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)
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?
My Defensive Playbook For This Quarter
Today I have a group of charts that I think will help me explain my thought process here. We’re keeping this very simple.
Let’s go! [Read more…]
[Options] February Expiration Open Positions Review
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.
How Low Can We Go?
Two weeks ago we outlined our thesis for near-term weakness in stocks in India and around the globe.
Since then we’ve outlined additional information that seems to support the thesis that the next few weeks, and potentially months, are to be a choppy environment. (Feb 1, Jan 27, Jan 26, and Jan 25).
After some downside follow-through, many are asking: How low can we go?
Well…Actually (Equal-Weight & High Dividend Factor Edition)
From the desk of Tom Bruni @BruniCharting
This week I saw two different charts floating around that I thought deserved a second look based on how they were presented and what their ultimate conclusion was.
The first has to deal with the underperformance of the Equal-Weighted S&P 500 Index, while the second looks at High Dividend Factor ETFs that have gone off the beaten path.
[Read more…]
Ancient Mathematics Says Sell Tech Stocks
For a variety of different factors, we’ve wanted to tactically be selling stocks all week and buying bonds instead, particularly US Treasury and Municipal Bonds. The weight of the evidence has been pointing to a more defensive rotation and out of risk assets. We listen to the market and act accordingly. Anything else would be irresponsible.
To be clear, longer-term uptrends in stocks and indexes globally are still intact, so far. Our goals, however, are to make money this quarter. We’ll worry about next year, next year. We’ll worry about the 3rd and 4th quarters when we get there this summer. For now, as we finished up January we’re now entering what is historically the worst of the “Best 6 Months of the year”, which go from November through April. So stocks going down in February would be perfectly in line with seasonal trends.
With that said, the biggest and most important index, arguably, in the United States, and maybe even the world, just achieved its upside objective. Keep in mind that Technology also represents about a quarter of the entire S&P500 Index: [Read more…]
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