Recently, an All Star Options subscriber wrote to me asking about some hard "rules" that I follow in entering and managing trades. The assumption was that I have some rules that I absolutely stick to which apply to every trade. As a guy who loves following rules when it comes to certain types of trading, I'm sorry to report that options trading isn't so cut-and-dried. There is nuance to position selection and management. It's much more art than science.

So while there are no one-size fits all answers to any questions about strategy selection, strike selection, and position management -- I've developed a few guidelines for myself that I rely on regularly as I ply my craft in the options market.

From the desk of Tom Bruni @BruniCharting

Last month we added the Investors Business Daily 50 List to our chart coverage. This list combined relative strength and strong fundamentals to highlight 50 of the best stocks in the market. Today I updated the Chartbook for members, so I wanted to highlight some of the best names I'm seeing on this list across several sectors of the market.

First, let's start off with a daily chart of the IBD 50 ETF $FFTY. Prices have been in a strong uptrend and look to be continuing higher after a failed breakdown below 35.15 and test of the 200-day moving average (if you're into that sort of thing). Momentum remains in a bullish range, so if prices are above 35.15 our upside objective continues to be 40.75.

Click on chart to enlarge view....

Next up in the Bull Market Rotation Wheel of Fortune: Airlines.

The S&P 500 printed a new all-time high on Tuesday (Aug 21), so naturally we should expect a broadening spectrum of sectors and stocks participating to the upside. The airlines have been a bit of a laggard in the transportation sector, but appear as a whole to have put in an important base with many names starting to breakout to the upside.

We've got a play to take flight in one of the leaders.

My favorite one lately is when the bears tell people that US Stock Market Breadth is deteriorating. It's hilarious.

Their sorry excuse for a thesis has them suggesting that there are fewer stocks participating to the upside in the U.S. Stock Market, when nothing could be further from the truth. I've been pounding the table that we continue to see an expansion in participation, which is characteristic of an uptrend and we have wanted to be buying stocks very very aggressively. That has worked out well. See here, here, here, here, here, here and here.

The...

From the desk of Tom Bruni @BruniCharting

Sector rotation. Sector rotation. Sector rotation. I probably sound like a broken record at this point, but today's theme is once again...sector rotation. This time it's Transports being helped back to their January highs by an improving Airline sector. We've spoken about the relative strength in Railroads and Trucking stocks, and acknowledged the relative under-performance in Airlines two months ago, but the data has slowly shifted.

We also pointed out that although Airlines were the worst of the Transport stocks, they were hanging in there on an absolute basis. Sure, there were weak names within the sector like American Airlines, but there were also strong stocks like United Airlines. Today, however, we're seeing the relative performance of the group trying to bottom and the absolute performance of even the weakest names improve.

With this headwind out of the way, the Dow Jones Transportation Average closed at...

During our August Members-Only Conference Call we discussed a lot of the big-picture trends from around the world and in India, but we wanted to do a long post discussing what we're seeing in the small-cap space. In this post I'll cover what we're seeing in the index itself, as well as get into some of its most actionable components.

From the desk of Tom Bruni @BruniCharting

Over the weekend as I was doing my run through the entire S&P 500, I noticed some emerging strength in areas that aren't quite as sexy as Medical Devices or Railroads (kidding). Instead, what I found was a number of potential long opportunities in the Real Estate, Utilities, and Telecom sectors. While the long-term relative performance of these sectors is nothing to write home about, as I explained in my Agribusiness post, I still think it's important to point out strength on an absolute basis because it contributes to the weight of the evidence and provides value to those who may have a portfolio approach that includes those areas of the market.

With that said, let's take a quick look at what I'm seeing.

Logistics and package delivery services provider $UPS got caught in the volatility-triggered downdraft of late January and early February of this year. It has spent the remaining part of the year forming a base and is now showing signs of filling the yawning earnings gap from February 1. We've got a play to take advantage of this gap fill and a likely return to new all-time highs.

During our August Members-Only Conference Call we discussed a lot of the big-picture trends from around the world and in India, but we wanted to do a long post discussing what we're seeing in the mid-cap space. In this post I'll cover what we're seeing in the index itself, as well as get into some of its most actionable components.

This is only the second episode of The Money Game Podcast that I've recorded with Phil and I'm already learning a ton. The idea behind these conversations is to help make us more aware of our bad habits driven by our cognitive behavior flaws. In this episode, Phil and I talk about Loss Aversion and the fact that as investors, and in life, we are motivated more by our fears than we are by our potential to win. This is an incredibly complicated topic so I think it's important to start this conversation early in this Money Game Podcast series.

Here is the second episode in full:

From the desk of Tom Bruni @BruniCharting

On May 1st we spoke about seasonality and why the traditional "Sell In May and Go Away talk is a great headline, but not a great investment strategy this year. While most think that seasonality data is useful to position ahead of what are typically weak or strong periods, we find that the real signal occurs when the market does not adhere to its historical patterns. Now that we're a bit more than half way through the seasonally weak May-October period, we thought it'd be helpful to look at the market's performance thus far and see what it could possibly mean for the rest of the year.

Excuse my cheeky blog post title -- we're bullish on United Technologies $UTX.

Consistent with our bullish stance on US equities over the near term, we continue to want to err on the long side. And we want to be in the strongest stocks in the strongest sectors.

One of those is $UTX and we've got a plan to play for a retest of all-time highs with an eventual breakout to significantly higher levels.

I live in a funny world where I can just write some things on my phone or computer and people all over the world begin commenting on it. These conversations can last for months, even years. Those who know me understand that I try to do my very best everyday to look at the market as nothing but letters and math. It shouldn't matter whether we're long Apple or short soybean futures.

Some assets strike a cord with people and make them feel differently. There is usually a popular figure involved or hot product and sometimes even conspiracy theories. It's fascinating to watch. Gold is definitely one of those. The crazies come out whenever you mention gold, bull or bear doesn't matter. Natural Gas used to be like that 12-15 years ago, but not since it lost 90% of its value over the past decade. This one is the bitcoin of energy.

Over the years, things like Apple and Tesla have had some cult followings in their stocks too. But most recently it's been $TSLA and the fact that they get to gossip about elon musk to get them away from writing about trump every day. Everyone wins. I saw an opportunity...

In options trading, risk management starts with defined risk and ends with position sizing. "Stop Losses" -- if used at all -- center around price action of the underlying and give zero weight to the value of the option(s) itself.

As an options trader, nothing makes me cringe more than hearing about traders "protecting" their open options positions with Stop Loss orders.

From the desk of Tom Bruni @BruniCharting

The Retail Sector ETF $XRT just made new all-time daily closing highs. I was going to write an extensive piece on how we got here and the lessons we can take away about knowing what we own and exercising professional skepticism when we hear gross generalizations like "retail is dying", but I don't think I even need to make it that complicated.

Not all sectors of the market are glamorous or sexy. And Agribusiness certainly isn't one of the fashionable areas of the stock market. But we're about to wade into our second name here because the opportunities are too good. At the end of the day, we go where the money is -- these are just ticker symbols, right?

Zoetis $ZTS, honestly, is a name I had never heard before. But it has been on my watchlist ever since Tom Bruni blogged about it on All Star Charts last week. I've liked the price action since and think the time is right to take a position.

Sponsored by Investor’s Business Daily – I've known Dan Russo for a long time and he always brings amazing insights and trade ideas. He's experienced, knows the markets and most importantly, he puts in the work. I have a tremendous amount of respect for him and his technical analysis. It was a real treat picking his brain and discussing what he is currently seeing in the market. In this episode, we talk about U.S. Stocks and the sector rotation that is taking place. He shares his thoughts about Healthcare stocks, Consumer Discretionary and life. I really enjoyed this conversation!

Friday we wrote about the US Dollar breaking out to 1-year highs and why it's one of the most important charts we're watching from an intermarket perspective. With that said, we always look at both sides of the story, and while the US Dollar breakout certainly adds to the bear case for Precious Metals, I want to use this post to explore all of the current bullish and bearish characteristics of the space.

During our monthly All Star Options conference call for members, JC & I laid out our bullish case for Berkshire Hathaway. These days, in spite of the diversity of industries that fall under the Berkshire umbrella, the tracking stock $BRK/B trades much like a financial.

Additionally, Berkshire exhibits high correlation to the S&P 500, and with the rotation we're seeing into financials it makes sense to be long $BRK/B while we're still incredibly bullish on the overall market. And of course, the technicals we're watching all point to higher prices.

This weekend all of the Chartbooks on the site were updated, so this is a quick post to highlight some of the significant developments since they were last updated. In our last update summary we discussed  the fresh breakouts in Financial Services, Consumer Goods, and IT, as well as the continued strength in large-caps relative to mid and small-caps. Today we're going to check in on those themes and also highlight some new ones.

It's not about being right, it's about making money. There's a difference and I think that gets forgotten too often. We want to position ourselves where we have the highest probabilities for success as well as where the risk vs reward is skewed in our favor. The goal is not to be right every time. The goal is to be profitable. That's why we're always thinking worst case scenario: always a risk level and always a target.

Today I want to focus in on what we're seeing in the S&P500 because I think that from a risk management standpoint, this 2780-2800 level is a big one today from a structural perspective. Until now, we've used 7000 in the Nasdaq100 and 2650 in the S&P500 as our lines in the sand. We've only wanted to be long if we were above those levels and that has worked out very well. Moving forward, I've identified some higher levels that we need to monitor.

As part of our ongoing partnership with Investor's Business Daily we have added all of the IBD50 components to our equity research coverage. We are updating our Chartbook on a weekly basis and members of Allstarcharts have access to that workbook here.

Today, I wanted to discuss what we're seeing from this group to identify the overall trend for U.S. stocks and also to find trading ideas to profit from that directional move. 

This index is made up of stocks showing both relative strength and positive momentum, in addition to other factors that play a role in adding or removing components from the list of 50. What attracts me to this group, however, is the relative strength and positive momentum, just to be clear.

This is the Innovator IBD50 ETF $FFTY which to me, is still in an uptrend. We want to continue to err on the bullish side of this ETF and the group as a...