From the desk of Tom Bruni @BruniCharting

The TSX Composite Index is attempting to hold above its 2018 highs after breaking out earlier this month.

In early August we wrote a Canada Update for Premium Members outlining ideas (and another post 2 weeks ago), many of which are working well, however, we're following up on this post today with a stock on our watchlist that's become actionable.

Nothing will frustrate stock market bears more than European Stocks breaking out to new all-time highs!

Do you know anyone who has anything positive to say about European Equities? Are conversations you're having and articles you're reading preaching strength and growth out of this area? I don't.

Prices, however, are telling a different story! Let me point you to the WisdomTree Europe Hedged Equity Fund, which prices European stocks in local currency. This is similar to the $DXJ vs $EWJ Funds in Japan.

The way I see it, this looks like a consolidation within an ongoing uptrend and most likely the beginning of a NEW uptrend, and not near the end of an old one:

Stocks in the U.S. Financials Sector have been underperforming since the beginning of 2018. If you recall, that is precisely when the majority of stocks around the world stopped going up. It's been a sideways grind for many stocks and sectors since then and a solid downtrend for many more, like small-caps, emerging markets and certainly financials, particularly on a relative basis.

A funny thing happened last week, however, while the gossip columns were filled with impeachment talk and upcoming recessions: Financials broke out to new multi-month highs relative to the S&P500. But not a whisper about it anywhere. I like that!

Ok, today's title is a cheeky play on the ticker symbol I'm trading today. I couldn't help myself.

Today I'm getting into a low conviction trade, but shifting the probabilities in my favor so that even if I'm wrong, I still have a good chance of reaching my profit objective. Pretty sweet, right? This is one of the many reasons I like trading options.

It's that time again where we start heading into the next monthly expiration cycle and I review any options positions that remain open which might require some adjustments, monitoring, or closing before we get too close to expiration.

The October expiration cycle has been good to us. At the time of this writing, I've already closed two positions that hit my stop loss levels ($NKE, $DE), and two others that hit my profit objective ($GLD bull call spread, $PHM bull calendar spread). And as usual, the bulk of profits for this cycle came from just a couple trades.

These are the remaining open October positions that need some monitoring:

During the course of my day-to-day engagement with the markets and market participants, including subscribers to All Star Options, I'm often asked my thoughts about how I would manage some position that somebody is in. Usually goes something like this:

Sean, I've been in this inverted double reverse downward dog position and now I'm losing money. What should I do?

Ok, so I made up the name of the position, but you get my point. People do weird things and they are looking for help.

One commonality I get from people engaging with options is that they bought long-dated calls (sometimes Leaps) in stocks they are bullish on in lieu of buying stock. And they got lucky -- real lucky. So lucky in fact that they are sitting on enormous open profits on calls that are now WAY in the money.

But this has them in a bind.

They want to continue to participate on the upside if the stock has more room to run, but they are scared to death of losing any part of their open paper profits. It's getting to a point where they are paralyzed with indecision. I've been there. I know...

I've been following the work Willie Delwiche for years. As both a CFA and CMT Charterholder, I think it helps him really put things in perspective for the Advisors he works with at RW Baird. I really enjoyed the conversation we had about the markets and his process. Willie incorporates a number of breadth and sentiment measures that I've always been a fan of. He helps the Investment Advisors at the firm work with their clients and manages several portfolios as well. In this podcast episode we discuss a number of different things...

In this Episode of Allstarcharts Weekly, Steve and I make the bear case for US Stocks. I think we've been pretty clear about the fact that we believe stocks resolve this consolidation since 2018 higher, not lower. But I always think it's important to take the other side and consider the alternative. What will the market environment most likely look like if we're wrong, and we should be selling stocks rather than buying them. I think we brought up some good points here.

Sometimes, the charts set up where one could make a case for a consolidation being on the cusp of breaking out. One such beleaguered company appears to be doing just that. If there's any follow through, there is blue skies ahead and I've got a play lining up on the runway to take advantage of the tailwind.

From the desk of Tom Bruni @BruniCharting

This post is a follow-up to today's Chart of The Week, so if you've not read that I'd recommend doing so before continuing with this deep dive.

From the desk of Tom Bruni @BruniCharting

Technology is the largest sector of the market from an indexing perspective, but it's also pervasive because it finds its ways into other sectors/industries and often plays a big role.

With that as our backdrop, it's clear why Technology's relative performance is an important barometer for the health of the market...and it's been quite good since breaking out to new highs in 2016.

So can it continue, or are we due for some TECHnical difficulties in the weeks and months ahead?