Me, JC, Steve, and the rest of the All Star Charts team were casually chatting during our weekly strategy session and Steve asked me: "What was our biggest options winner this year?"

Without a doubt, our best options trade in 2020 was long Peloton $PTON. We entered long October 60 calls in $PTON on June 17 when it was trading below $52 per share. The stock then went on a rocketship ride and touched an all time high north of $139 per share on expiration day Oct 16th, which we rode all the way. It rarely happens that we hold a long calls position all the way into expiration day, but the last 3 weeks saw barely a downtick, so there was never any reason to hit the escape hatch.

As we further discussed this, it hit me and I remarked to the guys that "What's your biggest winner?" is a bit of an unfair question. I don't think 2020 was a good year because of a handful of big winners. They certainly helped, but the real reason why 2020 was so successful was because PROCESS was our big winner.

Oh man this was a lot of fun! Fahmy calls me up and says let's invite everyone to a zoom call and talk about markets and drink Champagne.

Obviously, I said I was in!

We had two questions we were asking,

1) What was the biggest lesson you learned in 2020, and 2) What's your best trade for the first half of 2021?

Next July, whoever ended up picking the best trade gets a donation from us to the charity of their choice, plus I hand select a bottle of champagne and will be sending it over to the winner.

This was a great conversation with a group of really smart people. I'd be taking some notes on this one. There's good stuff in here.

Enjoy!

From the desk of Steve Strazza @Sstrazza

Welcome to the 2 to 100 Club.

Something we’ve been working on internally this year is using various bottoms-up tools and scans to complement our top-down approach. One way we’re doing this is by identifying stocks as they climb the market-cap ladder from small, to mid, to large, and ultimately to mega-cap status (over $200B).

Once they graduate from small-cap to mid-cap status (over $2B) they come on our radar. Likewise, when they surpass the roughly $30B mark, they roll off our list.

But the scan doesn’t just end there. We only want to look at the strongest growth industries in the market as that is typically where these potential 50-baggers come from.

Some of the best performers in recent decades – stocks like Priceline, Amazon, Netflix, and Salesforce, to a myriad of others… all would have been on this list at some point during their journey to becoming the market behemoths they are today.

When you look at the stocks in our table you will notice we are only...

Nifty Infra is pushing up against its long-term resistance. While the index has halted at these levels before, current market rally may lead to a breakout soon, going by the bullish momentum we're seeing in the index.

We've been tracking the cement space, and while earlier there were limited actionable trades, recent buying interest grabbed our attention again. We decided to dig a little deeper and found some actionable ideas.

Let’s take a look at this space and see what the charts have to say.

Nifty Infrastructure is taking another shot at its long-term resistance. With RSI alluding to bullish momentum and price moving higher, we could witness a good move in this sector going forward.

Click on chart to enlarge view.

Since we wanted to focus on Cement stocks, we created an equally weighted custom index dedicated to this space- ASC Cement Index. The custom index has taken support from a level with a lot of...

Since June, we've seen so many different breadth thrusts in the Large-cap Indexes, Small-cap Indexes and even within specific sectors. They keep showing up.

So when you look back historically, these breadth thrusts tend to come near the beginning of strong uptrends, not near the end of them. Go back in history and you'll notice how consistent this is.

So today, I thought I'd share some thoughts from the peanut gallery regarding my comments about this being the beginning of a new bull market, and not the end of one.

Enjoy:

These are the registration details for our Live Monthly Candlestick Strategy Session for Premium Members of All Star Charts.

This month’s Video Conference Call will be held on Monday January 4th @ 6PM ET. As always, if you cannot make the call live, the video and slides will be archived and published here along with every other live call since 2015.

Here are the details for Tuesday evening:

When assets are in strong uptrends, they tend to not just do well on an absolute basis, but they also outperform their alternatives. In the case of stocks, some good alternatives would be Bonds and Gold. No, not bitcoin.

So with stocks all over the world breaking out to new highs, more and more stocks participating, and even the biggest laggards around the world catching a bid, how are they performing relative to their alternatives?

Well, here is Gold vs the Nasdaq Composite breaking down to new 19-year lows. The trend is strong in this one:

I took a few days off over the holidays. I couldn't tell you the last time I went that long without a chart or a tweet. It felt good.

But you know what felt even better? Getting back to those charts and digging in on what's been going on around the world. It's not work for me. I mean it is, technically. But as you probably already figured out, this is something I really enjoy doing.

So what stood out the most upon my return?

I think it's got to be the victory laps from the bitcoiners on tilt. They're acting like they've never gotten a trade right in their lives. And that's dangerous.

Sure, we're happy bitcoin is doing well. It's already up 35-40% since our latest entry point a few weeks ago. That's great. And remember, this is after it doubled immediately after our last buy point this summer.

So no complaints here. But we don't have to make a big deal about it. This is...

The bullish trend in the market continues as more and more sectors and subsets join the rally. We have maintained our bullish stance on the Financial Services sector for quite some time but we thought we should dig a little deeper this time. Today we decided to look at a subset that has been performing well and could witness greater returns in the weeks and months ahead - Insurance.

From the desk of Steve Strazza @Sstrazza and Louis Sykes @haumicharts

At the beginning of each week, we publish performance tables for a variety of different asset classes and categories along with commentary on each.

Looking at the past helps put the future into context. In this post, we review the absolute and relative trends at play and preview some of the things we’re watching in order to profit in the weeks and months ahead.

The major indexes continue to hold important levels and many large-cap sectors have laid the foundation for upside resolutions and another leg higher in their relative leadership. 

SMIDs and Micro-Caps have had every chance to digest their recent gains, but we're yet to see that play out. Seeing such strong upward momentum from these stocks speaks to the healthy risk appetite we continue to point out.

FICC markets are also assigning stocks with a clean bill of health and supporting/confirming a continuance of their primary uptrends.

Let's jump right into this week's report with our US index table.

...

From the desk of Steve Strazza @Sstrazza.

Welcome to our “Under The Hood” column for the week ending December 25, 2020.

What we do is analyze the most popular stocks during the week and find opportunities to either join in and ride these momentum names higher, or fade the crowd and bet against them.

We use a variety of sources to generate the list of most popular names. There are so many new data sources available that all we need to do is organize and curate them in a way that shows us exactly what we want: A list of stocks that are seeing an unusual increase in investor interest.

Whether we’re measuring increasing interest based on large institutional purchases, unusual options activity, or simply our proprietary lists of trending tickers… there is a lot of overlap.

The bottom line is there are a million ways to skin this cat. Relying on our entire arsenal of data makes us confident that we’re producing the best list each week and gives us more optionality in terms of finding the most favorable trade setups for our clients.

As the major indexes continue to trade at or near record highs, we continue to...

As January gets under way, it’s time to review positions with January options that remain open (haven’t already hit profit targets or been stopped out). I'm getting started a little earlier this month because January expiration is on the 15th, and we're currently only 18 days until expiration. I don't want to wait through another long weekend before taking action. That's cutting it too close to expiration for my taste.

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.

Wow, after a few months in a row of not much to worry about heading into expiration, this month will keep us busy. At the time of this writing, I've got 5 positions that need continued monitoring (thankfully they are profitable) and a few that need to be closed now.

The rest have already hit our profit targets or stop loss levels. In...

From the desk of Steve Strazza @sstrazza and Louis Sykes @haumicharts

New Mystery Chart!

For those new to this 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?

From the desk of Louis Sykes @haumicharts

Seeing as the year is coming to a close, here's a short list of some lessons I'm taking away from this hectic 2020:

1. I know a lot less than I what think I do.
    
2. Relative strength is a lot more important than what I thought it was. People who followed relative strength in 2020 were the big winners. Seeing those names keeping their heads above water in March lead markets higher.
    
3. To not be scared of new highs and the danger of the attitude that something's "gone too far too fast". Where do you draw the line on whether something's gone too far? 20%, 50%, 100%? These are emotional levels, not rational ones.
    
4. You're never chasing if you're buying a breakout.
    
5. Don't try to be smarter than what I really am. Popular momentum names were continually showing up in my scans, but I refused to buy them. Instead, I was looking at names that didn't have as much coverage thinking it made me somehow intellectually superior (spoiler, it...

From the desk of Steve Strazza @Sstrazza.

We recently held December’s Monthly Conference Call which our Premium Members can access and rewatch here.

In this post, we’ll provide a summary of the call by highlighting 5 of the most important charts/topics we covered along with commentary on each.

Let’s dive into it.

This week we're looking at a long setup in the IT sector that is witnessing a good move.