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It’s Time! We’re Buying Bonds Now

January 25, 2020 by JC

I like to keep an open mind. When the data suggests getting more aggressive towards stocks, that’s what we’re going to do. When the data points a more defensive approach, then that’s what we’ll do too.

We’ve had a heck of a run in stocks since the summer, and now I think it’s time for a break, at least at the index level. Remember, regardless of overall market conditions there will still always be some stocks going up and some going down. In fact, I think Utilities see some outperformance here and I listed which stocks we want to own. So far they’re working.

Anyway, so why the new defensive position? Well, the things we said needed to happen for us to pull back are starting to happen. It’s really as simple as that.

Let’s get into it: [Read more…]

Chemicals > Mining In Toxic Materials’ Space

January 23, 2020 by Tom Bruni

From the desk of Tom Bruni @BruniCharting

Thank you to everyone who responded to this week’s mystery chart.

No mixed opinions this week, almost everyone saw the pullback into support as a successful breakout retest and was a buyer.

With that as our backdrop, let’s take a look at this week’s chart. [Read more…]

Video: Communications Stocks Breaking Out

January 22, 2020 by JC

In this Episode of Allstarcharts Weekly, Steve and I talk about the newest Sector in America: Communications. Back in 2018, the Index makers took out some of our favorite Technology stocks and put them along with some telecom into this new Index called Communications. With Google and Facebook now representing 40% of this $XLC index, the fact that we’re just now breaking out to all-time highs says a lot about the space. [Read more…]

We Want To Buy These Utilities Stocks

January 22, 2020 by JC

This long weekend we had more time to take a step back and think about the things that are currently going on in the market. A big theme that stuck with us was the strength in stocks in the Utilities sector. The question was/is whether this strength in higher dividend paying stocks is evidence that rates are about to fall? Or is there such an overwhelming amount of strength in the stock market, that Utilities are just included in the rally?

Both are acceptable answers and theories, I’d argue. You can find more on that conversation here.

But sometimes I think we just need to pay attention to what’s right in front of us, which in this case is Utilities stocks going higher. So why don’t we just buy utility stocks and not worry about the bond market for a hot minute? The most bullish thing a stock can do is go up. And that’s exactly what’s happening here.

The advantage in this case, I believe, is two-fold. If this indeed is a sign that rates are about to collapse, that would be good for Utility stocks. If this is just an overwhelming amount of buying pressure for stocks in general, that would be good for Utility stocks. If the stock market goes into a correction, lower beta & higher yielding stocks would hold up better on a relative basis than other stocks and sectors. Again, that would be good for Utility stocks. Do you see the common theme here?

This is what the Utilities Sector looks like right now: Just breaking out and on its way to 73 for $XLU:

[Read more…]

Mystery Chart (01-21-2020)

January 21, 2020 by Tom Bruni

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] A Teachable Moment in $BYND

January 21, 2020 by Sean McLaughlin

Wow.

What a run we’re having in our Long May 100-strike calls in $BYND purchased on December 20th for $4.00 when the stock was trading below $77/share.

I wish I could say this was a regular occurrence, but of course we know this isn’t true. However, this I know with absolute certainty: stepping up to the plate and taking our swings in trades with proper reward-to-risk setups, appropriate position size, and a plan for risk management again and again allows us to “get lucky” every once in a while. And sometimes it only takes one or two trades to make your month or your year. This $BYND trade certainly has a solid chance to become one of those year-makers.

Back to luck, there’s a big difference between true “luck” like winning the lottery, and manufacturing your own luck through Best Practices. Which luck would you rather have?

I’ve been contacted a bunch by people who followed us into this trade and the general feeling I get from people is that they are scared — scared of letting these enormous open profits get taken away by the evil Mr. Market. [Read more…]

Are Utilities Pointing To Lower Rates Ahead?

January 20, 2020 by Tom Bruni

From the desk of Tom Bruni @BruniCharting

My big question coming into this weekend was what should we make of the action in Utilities lately and what does it mean for Bonds?

Utilities are making new all-time highs on an absolute basis, posing this question on Twitter: “So is the breakout in Utilities to new all-time highs a signal that a Bond breakout is coming, or is it simply a bi-product of overwhelming demand for Equities?

This got a lot of attention and responses, so I thought it’d be worthwhile to quickly outline what I’m watching in Utilities and the Bond market over the next few weeks. [Read more…]