Mike Hurley has been an inspiration to me for many years. When it comes to market breadth, this is the guy. He'll tell you he learned it from his predecessors and how he's standing on the shoulders of giants and all those things he discusses in this episode, but for me personally, he's been a great influence for sure. Many of you know how seriously I take my breadth work and how valuable it has been to so many of us for many years. It's people like Mike and others who have helped my process evolve to where it is today.

This was a really fun podcast for me because the topic of market breadth and internals is so near and dear to my heart. In this podcast episode, Mike and I talk about history and how different turning points in the stock market have been led by breadth deterioration (at tops) and breadth improvement (at bottoms). We also discuss 2020 so far and how breadth was deteriorating well before the S&P500 and Dow hit their ultimate highs. Once again, it was breadth that got us out of the way of trouble this...

From the desk of Steve Strazza @Sstrazza

Thank you to everyone who responded to this week’s Mystery Chart.

We had a few buyers but most of you were selling at this logical level of interest or exercising patience to see how prices react here. A few responses also pointed out that this likely isn't the best time to enter on the long side but are anticipating an eventual breakout and would be buyers if and when we get it.

This is the same camp we'd fall into and we provide details why in the original Mystery Chart post. With that as our backdrop, let's look at the chart.

The market goes through periods of volatility. We've seen it before and we'll see it again. For me, it's all about learning from this experience and coming out of it a better and wiser investor. Notice how you're behaving and acting during this period.

I know the way I'm feeling during this volatility is much different than my emotions and behavior in 2008 and 2011 and 2015 and 2018. I learned. And I will learn from this one as well to prepare me better for the next go around. I encourage you to do the same.

Today I want to talk about how, "Bottom fishing can be hazardous to your wealth". The goal is not to try and catch a falling knife (see here why), but to buy on the way back up.

It's a lie that you have to buy low and sell high. I've found it much more helpful to buy high and sell higher. I'd rather pay more knowing that the trend is up, than trying to be a hero and be the first one in. Notice how we didn't get bearish stocks until late January, after they had already been rolling...

From the desk of Steve Strazza @Sstrazza

We look at a variety of intermarket ratios that span just about every asset class in order to get a read on interest rates. Here is one that we don't discuss too often, but its relationship with the 10-Year Yield is obvious from looking at the chart below.

The S&P High Beta/S&P Low Volatility (SPHB/SPLV) ratio made significant lows around the same time and place as the 10-Year has several times over the past decade.

Last week we outlined our thesis for a lower low in Indian stocks, as well as what it would take for us to get more aggressive on the long side.

After another sharp move lower with dramatic blowups in  Yes Bank and Crude Oil, let's revisit that thesis and discuss why patience remains the best course of action given current conditions.

From the desk of Steve Strazza @Sstrazza

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?

Yesterday, $VIX printed the highest level we've seen since the financial crisis in 2008. That's a twelve year high.

It exceeded the "government shutdown" spike of 2011, the Chinese stock market scare of 2015, the 2016 election fear mongering, and the Brexit noise.

Editors note: The chart police (aka, JC) would like me to point out that this is a weekly chart and the last bar on this graph is not complete. The horror!

We can point to a couple big reasons why volatility is spiking (Coronavirus, oil crashing) and a few smaller ones (we're overdue, debt, whatever....). But none of that really matters. Only price pays, right @Alphatrends?

You come to All Star Options for options trade ideas. But you also come to ASO for responsible risk management and strategy selection. Here's my thoughts now (subject to change as new information presents itself) for the next few weeks.

From the desk of Steve Strazza @Sstrazza

In this report, we cover our Coronavirus Custom Index which is comprised of stocks we believe benefit from the coronavirus as well as a playbook to profit from these strong performers. 

To be clear, we didn’t find these stocks looking for coronavirus plays, we found these through our ordinary process of scanning for relative strength. We were simply looking for stocks that have been bucking the trend during the recent selloff. With that said, it was hard to ignore the results when we thought about what these companies do.

Here is our All Star Charts Coronavirus Custom Index making higher highs and higher lows recently while the broader market squanders near bear market territory.

Volatility spiked over the weekend. Here are some thoughts.

From the desk of Tom Bruni @BruniCharting

There's been an ag-gravating pattern of behavior torturing bulls in the Agricultural Commodity space, so this educational piece will highlight the conditions that got us here and also outline a new trade idea.

This is the big question going through the minds of market participants all over the world right now. What's next? Have we seen the worst of it? Or is this just the eye of the storm?

I remember as a kid I was 10 years old when a huge storm hit Miami. Hurricane Andrew was a massive category 5 storm that was supposed to hit Orlando but in the middle of the night changed directions and decided to make a beeline towards my house. So the eye of the storm actually went over our heads:

Things are whippy out there. And volatility is elevated to levels we haven't seen in quite a while. This is no time to be a hero. This is the time to focus on edges and putting them to your advantage.

I know it's sexy to be a buyer of calls if you want to be the hero bottom caller. Similarly, it's equally sexy to be a holder of long puts into a market crash. But this is not the time to be initiating new long calls or puts positions. The premiums you'd pay are so high right now that you could totally nail the direction, but you'd be swimming upstream against an eventual mean-version in volatility pricing.

But this does not mean we pick up our ball and go home. We options traders have options!

In this environment, we're looking for plays where we are net sellers of premium. With premiums this juicy, it would be irresponsible to do anything else.

Yes Bank is in the news again and following an 83% intraday move to the downside, market participants are wondering what's next?

In this post, we'll outline why this week's move is business as usual for the stock, what we'd do with it now, and why the best trade in Yes Bank may be to avoid it altogether.

The current market environment remains choppy, so we want to revisit a sector that's showing relative strength, Pharma.

In November we pointed to the improving prospects of the Nifty Pharma Index and its components, following up with additional trades in January.

Today, we want to revisit the sector to see what's changed and what stocks we want to be buying and selling.

First, let's start with the Nifty Pharma vs Nifty 500 ratio chart that continues to turn higher after meeting our downside objective late last year. This continues to suggest further outperformance from the Nifty Pharma sector relative to the broader market.

Click on chart to enlarge view. 

Looking at the Nifty Pharma Index on an absolute basis is where things get a bit tricky. Prices confirmed...