There was an inbound question to me this week regarding adjustments I make on short strangle trades.

For reference: A Short Strangle is a delta-neutral options position that consists of selling equal amounts of out-of-the-money naked puts and calls for a net credit. If everything goes according to plan, the underlying stays in a trading range and I can realize a profit buying back the short options for cheaper than I sold them.

Of course, it doesn’t always work out that simply. Many times, we need to play defense. Defense often involves rolling short options further away from the current price action. In practice, this means buying to close the existing short option and selling a further out-of-the-money option (in the same expiration series) for a combined net debit, which reduces my total net credit in the campaign.

The reader was asking me how I choose my “take profit” limit order following a defensive adjustment. Here was my answer:

If this is a bull market, then what comes next?

Breadth Expansion.

More upside participation.

Sector Rotation.

The list of the 52-week highs getting longer.

We've been betting that this is a bull market since last year. That has worked in our favor.

But what does the market need to do to reiterate that we are still, in fact, in a strong, healthy bull market?

More new highs.

Here's a look at the NYSE new 52-week highs list creeping higher in recent weeks.

From the Desk of Steve Strazza @Sstrazza

Welcome to The 2 to 100 Club.

As many of you know, something we've been working on internally is using various bottom-up tools and scans to complement our top-down approach. It's really been working for us!

One way we're doing this is by identifying the strongest growth 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.

As the bull market in stocks continues, the lifeblood to keep the ball rolling is sector rotation.

We're already seeing some of the big caps that have driven the first leg of this run start exhibiting signs of overexertion (check out $GOOG today).

It makes sense to us that stocks further down the cap scale are going to start asserting themselves and perhaps in some cases play "catch up" to their big brothers.

Today's trade is in a cyclical name in the Logistics space.

From the Desk of Ian Culley @IanCulley

Petrocurrencies and crude oil futures are diverging.

The currencies that benefit most from higher oil prices refuse to roll with crude’s steady decline. 

Perhaps it’s more about the US dollar than a handful of currencies tied to oil’s supply and demand dynamic.

But with OPEC up to its old tricks again – Saudi Arabia announced deeper production cuts last weekend – the question arises…

Is crude oil due for a bounce?

Check out the overlay chart of our petrocurrency index and crude oil futures:

Crude oil posted a key pivot high a week after our index bottomed in late September. Since then, these markets have taken separate paths.

This is the video recording of our June 5th Monthly Charts Live Strategy Session

From the Desk of Ian Culley @IanCulley

What will it take for gold to make new all-time highs?

A weaker US dollar and falling real yields are likely candidates for leading catalysts.

We can also add a significant unwind in commercial positioning to the list. 

Meanwhile, it’s a range-bound mess.

Let's stick to the basics. Uptrends – at the core – come down to more buyers than sellers. And risk-on/risk-off intermarket ratios provide excellent tools for tracking whether bulls or bears dominate a particular market.

After the recent bout of selling pressure, one precious metal risk ratio is approaching a potential inflection point…

From the Desk of Steve Strazza @Sstrazza

Welcome to The Minor Leaguers.

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.

Thursday morning I was in New York City chatting with Maria Bartiromo about the ongoing Bull Market in Stocks.

Maria and I have been talking about this topic pretty regularly since she looked at me like I was crazy last October.

A lot has happened since then as both the Nasdaq and S&P500 just closed out back to back months at the highest levels in a year.

The market got the sector rotation it needed as we entered 2023.

And now we're looking for that rotation back into those original leading sectors off the lows last summer.

I believe we already started to see it get going right after we finished up our conversation Thursday morning.

Here's the interview in full:

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 which you can check out here.

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: