I was lucky to spend a few weeks in Europe earlier this month meeting with customers, colleagues and old friends. For me it's easy to get up in front of a crowd and talk about the charts that I've been staring at every day for over a decade. I can practically draw them for you at this point. Where I really win is in meeting with investors and traders from completely different cultures both before and after my events. I just got back from a trip to Athens, London, Paris, Amsterdam and Dublin. Between meetings, interviews and presentations, I was able to learn a lot from other investors and gain new perspective on things. That's the point of all this. If we're not going out of our way to learn, then what are we doing?
In this conversation, I sit down with our very own Sean McLaughlin to talk about some of my experiences on the road.
The good news is the S&P 500 and several other large-cap US indexes are back at all-time highs, however, the bad news is there remains a lack of confirmation from breadth and momentum readings around the world.
Needless to say, it was easier to be buying stocks last month than it is today, but let's avoid getting into the weeds and simply look at the number of markets around the world above their 2018 highs.
Below is a table of the global equity markets we track prices in their local currencies. While there are performance stats from several key inflection points like the January 2018 and September highs in the S&P 500, as well as its bottom on December 24th, we want to focus on the left-most "Change From 2018 Highs" column.
This compares the market prices now to where they were at their highest point in 2018, or in other words, it gives us an idea of what the trend is.
Currently, the median stock market in the world is 6.22% off its 2018 high.
There are a lot of interesting charts out there around the world. The current market environment has provided us with a ton of opportunities in multiple asset classes. We've talked about stocks, we discussed commodities, and today I want to focus on the Bond Market. Both Interest Rates and the most liquid exchange traded fund are at critical levels that we need to watch.
Here is the video from my BNN Bloomberg interview this week. We talk about the implications of a weaker US Dollar, including what that would do to stocks, emerging markets, metals and others. I've been waiting for it all year. But think about it. We've already seen some of the things we would expect to see in a weaker Dollar environment. Gold strong, for example, and an inability for the Euro to go lower. So for me, I think this Dollar fall is just getting started.
One of the things I harp on here is Best Practices. When I make it a habit to engage in best practices in terms of both strategy selection and position management, I put myself in position to win more often.
Best Practices skews odds in my favor. It keeps me from swimming upstream against volatility currents. It keeps my risk lower. It helps with P/L consistency. And it helps me stick with trades that still have time to play out.
Selling Half is a position management best practice I employ most often when trading straight long calls and long puts. I like to sell half of my position when the value of the position has doubled. It can be very tempting to want to hold your entire position if it quickly runs up and you find yourself sitting on tremendous profits thanks to the leverage inherent in long options. And certainly, there are times when I wished I would've just sat on my hands as I watched a stock continue to fly higher. But for every one of those times I wish I had, there are easily five other times I'm glad I hadn't.
There are a number of great services for options traders out there that offer smart ideas for premium selling, or Iron Condor trading, or earnings trades -- I'm friends with many of the best practitioners. They are fantastic at what they do and I'm happy to name names. Just ask.
Subscribers to All Star Options come to us for option trade ideas which take advantage of directional edges the All Star Charts research team uncovers through exhaustive technical analysis. We are not beholden to any particular type of strategy, options spread, or timeframe. We simply examine each opportunity on a case-by-case basis and make an informed decision on what we feel is a good way to play a particular situation. We might not always end up picking the "best" way to leverage into a opportunity, but we think over time and over many iterations, our good decisions compound favorably.
These are the registration details for the monthly conference call for Premium Members of All Star Charts. In this call we will discuss the global market environment and how to profit from it. As always, this will include Stocks, Interest Rates, Commodities and Currencies. The video of the call will be archived in the members section to re-watch any time and the PDF of the charts will be made available as well.
This month’s Conference Call will be held on Monday June 19th at 7PM ET. Here are the details for the call:
We've been writing about the lack of trend in India and Equities around the globe for months and despite the breakout to new highs in the Nifty 50 and several Large-Cap stocks, we remain cautious about calling this a "confirmed uptrend" and getting overly aggressive on the long side.
In this post, we'll explain why this remains a two-way tape.
While updating our Members-Only Chartbooks today we came across two major breakouts that need to be pointed out as they play key roles in the Infrastructure and Public Sector Bank Sectors.
On May 1st, we wrote an update called "Canada or Cantada" going through the major sectors/indexes to provide a view on how we wanted to approach Canadian Equities.
As we can see, there are more uptrends than downtrends from a structural perspective. Tactically however, most of these are not at levels where we want to be initiating new positions or have a lot of conviction. After strong moves since December, they need some consolidation to digest those gains and set up for a sustained move higher.
Another thing to note is that the more defensive areas of the market like REITs and Staples have the clearest structural uptrends of the group. They make up a smaller portion of the market, but I think it's still an interesting signal about market participants' risk appetite and outlook for Interest Rates.
Additionally Energy and Materials account for roughly 30% of the index and remain a headwind, so without rotation into those names I think it'll be tough for the TSX Composite to break out to the upside.
The drama queens have been in full force this weekend coming into the opening of trading this Monday morning. Here was my observation after rolling out of bed:
Geez, I shoulda checked $ES_F before I checked my twitter stream this morning.
FinTwit: THE MARKET IS CRASHING. ARMAGEDDON!!!
Futures: Down 6. Barely a rounding error.
Back to bed.
— Sean McLaughlin, NLD 📈 (@chicagosean) June 3, 2019
I rarely seek to be contrarian simply for the sake of being contrarian, but the mini hysteria I'm sensing amongst market participants feels a little hollow. Is everyone too leveraged? You're not trading based off headlines are you? ...are you??
If so, knock it off. Scared money don't make money.
With the S&P 500 re-acquainting itself with it's 200-day moving average, here's how we're going to play it...
