People love the idea of entering options trades with a high probability of success. It’s easy to be seduced by the prospect of winning on 60, 70, or even 80 percent of our trades.

It doesn’t take much imagination to enjoy visions of swimming in all the cash we’d surely be earning with such a strategy. And why not? With that kind of win rate, we’ll often go on runs where we win on multiple trades in a row.

Talk about a confidence builder!

Of course, there is no free lunch on Wall Street. And in strategies with a high probability of success, there is a dark underside that people conveniently like to ignore.

This type of discussion quickly makes us unpopular at cocktail parties. So we avoid it. Many know, but most are unwilling to talk about it.

The trading action in the regional banking sector, and to a lesser extent bond ETFs, drove home a stark reminder to anyone involved in naked options (like me) — that there will be times when we will suffer large losses.

They say to buy when there's blood in the streets.

Does this count?

Hardly.

Many indexes around the world are just a few basis points from new highs. Most stocks in America have been rallying for 9 months.

But sure, there's a little blood, with some of these small regional banks disappearing. But depositors are keeping their money, so the only cost is a few people lost their jobs.

Good. Unemployment is way too low anyway.

From the Desk of Ian Culley @IanCulley

Strength begets strength.

Buyers taking control of a market heading into the weekend exude confidence. That describes gold bulls last Friday as they drove prices higher into the close.

To no surprise, Gold kicked off the new week gapping higher and rallying more than 2.5%. We call this bullish follow-through. 

So what’s next for precious metals?

From the desk of Steve Strazza @Sstrazza

Welcome to our latest Minor Leaguers report.

We've had some great trades come out of this small-cap-focused column since we launched it back in 2020 and started rotating it with our flagship bottom-up scan, Under the Hood.

For the first year or so, we focused only on Russell 2000 stocks with a market cap between $1 and $2B.

That was fun, but we wanted to branch out a bit and allow some new stocks to find their way onto our list.

We expanded our universe to include some mid-caps.

To make the cut for our Minor Leaguers list, a company must have a market cap between $1 and $4B.

From the Desk of Steve Strazza @sstrazza and Alfonso Depablos @Alfcharts

This is one of our favorite bottom-up scans: Follow the Flow.

In this note, we simply create a universe of stocks that experienced the most unusual options activity — either bullish or bearish, but not both.

We utilize options experts, both internally and through our partnership with The TradeXchange. Then, we dig through the level 2 details and do all the work upfront for our clients.

Our goal is to isolate only those options market splashes that represent levered and high-conviction, directional bets.

Historically they’re all usually just making a big deal about things that are not a big deal.

It's their job to make noise. And in some cases, it's not even their job, humans just like to overreact and make a lot of noise.

As investors, it's our job to ignore.

We don't care about their fed policies. We're not interested in arguing about wars. I don't care who the president is. And a "bank crisis" is laughable these days, compared to what I had a front row seat to back in 2008.

They make noise. We ignore. It's that simple.

Late last week when people were panicking, I was right here telling you we wanted to buy stocks.

Why?

Because in bull markets, it pays well to own stocks.

Besides, the Dollar was falling apart. So if stocks were about to collapse and this was 1929 all over again (lol btw), then the Dollar would be ripping.

It was not.

That was the signal. It still is.

If the US Dollar index is below 105, we want to be buying stocks very aggressively.

This is the weekly post that aggregates all the charts we put together throughout the week and organizes them all into one, easy to flip through deck.

From the desk of Steve Strazza @Sstrazza and Alfonso Depablos @AlfCharts

Our Hall of Famers list is composed of the 150 largest US-based stocks.

These stocks range from the mega-cap growth behemoths like Apple and Microsoft – with market caps in excess of $2T – to some of the new-age large-cap disruptors such as Moderna, Square, and Snap.

It has all the big names and more.

It doesn’t include ADRs or any stock not domiciled in the US. But don’t worry; we developed a separate universe for that. Click here to check it out.

The Hall of Famers is simple.

We take our list of 150 names and then apply our technical filters so the strongest stocks with the most momentum rise to the top.

Let’s dive right in and check out what these big boys are up to.

Here’s this week’s list:

Check out the equal-weight energy index:

It’s finding support where I would expect – the prior-cycle highs from 2018 and a key retracement level off the 2020 low.

It's the weekly bond edition of What the FICC?

The Silicon Valley Bank $SIVB collapse dominates the week's headlines.

While risks appear isolated for now, unlike in 2008, the next chart reveals a storm brewing beneath the surface...

From the Desk of Ian Culley @IanCulley

US bank stocks big and small took a beating Thursday, with the Bank ETF $KBE posting its largest single-day decline since 2020.

The steep sell-off came on the heels of Silicon Valley Bank’s $SIVB Wednesday announcement of a $1.8B loss, mainly due to accepting unrealized losses in US Treasuries.

Based on SIVB’s acute exposure to the tech industry, you can argue larger banks with more diversified portfolios and clients don’t carry the same risk. And they don’t.

Regardless, the next chart reveals a storm brewing beneath the surface...

Check out bank stocks (KBE inverted) overlaid with the US Treasury 2s10s spread:

I inverted KBE to highlight the strong relationship between banks and the yield curve. The two lines look almost identical over longer timeframes.

From the Desk of Steve Strazza @Sstrazza

Dividend Aristocrats are easily some of the most desirable investments on Wall Street. These are the names that have increased dividends for at least 25 years, providing steadily increasing income to long-term-minded shareholders.

As you can imagine, the companies making up this prestigious list are some of the most recognizable brands in the world. Coca-Cola, Walmart, and Johnson & Johnson are just a few of the household names making the cut.

Here at All Star Charts, we like to stay ahead of the curve. That's why we're turning our attention to the future aristocrats. In an effort to seek out the next generation of the cream-of-the-crop dividend plays, we're curating a list of stocks that have raised their payouts every year for five to nine years.

We call them the Young Aristocrats, and the idea is that these are "stocks that pay you to make money." Imagine if years of consistent dividend growth and high momentum and relative strength had a baby, leaving you with the best of the emerging dividend giants that are outperforming the averages.