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These Are The Trends In U.S. Stock Market Indexes

June 1, 2018

It's very easy to get caught up in the day to day noise of the market, especially if you're allowing toxic media content into your life. It's virtually impossible for us to completely ignore it all, although I do try my best. So, at the very least, we want to be aware of what type of content we're consuming and the conflicts of interest that are driving it. But another, and much easier way to avoid getting lost is simply by taking a step back. Monthly charts allow us to see the forest through the trees and is one of the most valuable parts of my entire process.

Even if you're a day trader or short-term swing trader, I think it's a huge advantage to understand the direction of the underlying trends. For me, who specifically looks out weeks and months, trying to make money this quarter, my monthly candlestick chart review is essential. I can't begin to tell you how much this has helped me avoid blindly calling tops or bottom fishing in never ending downtrends. It most certainly helps us err in the direction of the underlying trends which, of course, increases our probabilities of success.

All Star Options

[Options Premium] Income Trade for an Energetic Summer

June 1, 2018

The $XLE Energy Sector ETF is currently scoring one of the highest implied volatilities relative to it's biggest ETF peers. Sure, it's warranted as price action has been a bit erratic of late. And we can argue about the politics and economics behind the moves and what they all mean. But I'll leave that to another guy who doesn't value his time. All I care about is putting myself in trades where an edge exits.

And when IV is priced high, these are often great opportunities to hunt for credit spreads. 

[Premium] Nifty Auto Stocks To Buy

May 30, 2018

In this week's India Chart of the Week I discuss why the equal-weighted Nifty Auto index is suggesting we want to be looking to the sector for opportunities on the long side, despite the overall lack of direction in the cap-weighted index over the last few months. To avoid being redundant I'll refer you to that post for the full explanation of this thesis and get right into the Auto stocks we want to be buying.

Click on chart to enlarge view.

[India Chart of the Week] Bullish Breadth Signaling Opportunity In Nifty Autos?

May 30, 2018

Equal-weight indexes are one of the most valuable tools we use here at Allstarcharts. They provide a perspective on the overall strength or weakness of an index's components that's not otherwise seen in the cap-weighted version. The confirmation or divergence signals generated by comparing the two often acts as a leading indicator, letting us know whether the cap-weighted index's move is supported or if we should be on the lookout for a potential reversal.

Below we've created an equal-weight Nifty Auto index in blue, which is constructed by assigning the same weighting to each of its 15 components. We've plotted it against the cap-weighted Nifty Auto index in green.

Click on chart to enlarge view.

Mystery Chart 05-30-2018

May 30, 2018

From the desk of Tom Bruni @BruniCharting

Every now and then I use mystery charts to source people's raw opinions and challenge my own thinking. Not knowing what a chart represents helps eliminate biases and any ideas we may already have in our heads. And so today I'm back, selfishly, looking for thoughts on the chart below.

Click on chart to enlarge view.

All Star Options

[Options Premium] Buy the Dip in Emerging Markets?

May 30, 2018

So it seems a strong US Dollar has been bad for global stock market ETFs due to local currencies exposure. This has damaged the bullish trends in otherwise strong economies and the team here at All Star Charts has been looking to identify the global ETFs that are holding up best and likely to lead when currency headwinds abate.

A favorite to lead the charge is the iShares Emerging Markets ETF -- $EEM. Tom Bruni likes the bull thesis here, but I'm not so sure it'll be that easy. Have no fear, I've got the perfect way to play our contradicting opinions with options.

Two Global Stock Market ETFs to Watch

May 29, 2018

From the desk of Tom Bruni @BruniCharting

The US Dollar Index is up roughly 7.5% since it's February lows, a move that has hit many of the global stock market ETFs we follow due to their local currency exposure. The Frontier Markets ETF $FM is among those hit hardest, down roughly 16% since late January. With that in mind, we like to focus on strength and there are three global ETFs that continue to hold up well and should lead if/when strength in the US Dollar subsides.

Click on chart to enlarge view.

All Star Options

[Options Premium] The Most Compelling Idea from the Promising "Solar Patch"

May 25, 2018

I was confused too. But no, $DQ is not America's favorite destination for shakes, malts, and blizzards. But it is sexy in it's own way -- it's an energy company named Daqo New Energy in one of the hottest sectors we think will be leading stocks higher this year -- Solar Energy. According to wikipedia, $DQ is a Chinese company "engaged in the manufacture of monocrystalline silicon, polysilicon, and silicon wafers, primarily for use in solar photovoltaic systems." OK, sounds cool? It really doesn't matter to us, we're just following price, and we're going to trade it with options in a defined risk spread.