TIME TO BE A STOCK PICKER

My recent Boot Camp was themed on how to be a Better Stock Picker. I spoke about the recent trends in the market that have been moving away from active investing towards a passive investing approach. ETFs have been the favored instruments to participate in stocks, and while inflows have been mostly away from stocks all year, the inflows we’ve seen have been primarily to SPY.

Here’s another interesting stat: http://www.bloomberg.com/news/articles/2016-07-18/investors-pull-most-money-from-u-s-stock-pickers-since-2008

As the market moves to new highs, people have sworn off stock picking. That’s a great signal IMO.

$IBB is at an important spot here today. This range has wound pretty tight here on the lower time frame.

If $IBB trades under $269-$268, $BIS starts to look a bit more attractive.

I still think this is set up for higher prices, but that would mean that the dip needs to be bought here today.

OA

Long August calls here. More later.

OA

You may feel uneasy about engaging the market “here.” However, as this move pans out, it’s important to pay more attention to individual groups and sectors as opposed to just SPY. This week I have three individual themes that I think will present opportunity regardless of whether or not the market trades up or down. That’s what is most unique about these types of markets. People need to get engaged. The market becomes less of a factor to influence individual stocks. Rather, its the collective action of individual stocks that will drive the market. I think we’ll continue to see the defensive positioning rotate into some offense here as this trend persists.

The biotech sector, energy, and china internet are my themes. Most of the stocks in these groups offered slightly lower prices last week, and there are good set-ups across the board.

I took on several positions in China internet stocks already, and started on Biotech last week. This is a great spot for LABU/IBB…but aside from my $CELG from Friday, I am stalking $KITE.

I just bought back into crude here, just looking for a place to get on base.

I’m as bullish as I can get on China here. Take a look at intraday charts on any names such as $SINA, $SOHU, $BIDU, $JD, $WBAI, etc. Very bullish flag and wedge patterns developing over the last few days.

I’m also very bullish on biotech next week, as discussed in After Hours with Option Addict. The $IBB has some pretty decent balance here at these prices, and has been a laggard of this rally, IMO. Rather than post a bunch of charts in this post, I’m going to summarize by saying I’ll be starting some call positions in $CELG and $KITE by EOD.

I’m also loving the 1998 analogues being thrown around on Twitter today. Makes me feel pretty validated for spending the last couple years explaining the consistencies, correlations and predictable outcomes.

Have a good one,

OA

Weird, huh? I warned of this outcome for a very, very long time. Pretty cool to be totally loaded for this and to sit back and watch it in all its glory. After a few months, everyone that swore off stocks will slowly come back to the fold.

I wanted to recap this signal we discussed in After Hours with Option Addict a couple weeks ago. For all the point and figure chartists out there, the $BPTRAN, which is the bullish percent for transports hit 15% a couple weeks ago. FIFTEEN PERCENT.

I spent a lot of time on the Dow Theory sell signal last year, debating its reliability with another blogger. It produced a strikingly similar signal in 1998. Take a look at a chart going back to the late 90’s of the $BPTRAN:

This is a once in 5 years type of signal. This is also why these stocks have been ripping, selectively. The bullish percent is great at identifying investable groups/sectors with fairly objective analysis.