It’s been a roller coaster ride of a market with twists, turns and several bumps along the way… which has made making money in this market a challenge… to say the least.
On any given day, a tweet from the President… a headline from China… or an announcement from the Federal Reserve Bank… has the power to stop the market on a dime… and reverse its course.
It’s very easy to get caught up in the noise in such a heavy news-driven stock market…
So how can still prosper and profit in such an unstable environment?
Focus on what the charts are saying… and keep a keen eye on the price action.
Not only have I been able to stay above water… But Bullseye Trades have all been winners since the launch of the service.
(Bullseye Trade is proving to be one of my most lucrative strategies ever… every week has been a profitable one. And you can follow along too… as I share my highest-conviction trade idea once a week and deliver it straight to your inbox. Join now)
You see, when you only place trades on your bread-and-butter setups – the strategies that have proven to make you money time after time – you improve your odds of success.
And do you know what else?
I’ve got a crystal clear picture of the macro view now…
And looks like it’s like we’re in for another bloodbath.
There are several disconnects happening… that can no longer be ignored.
So how am I preparing?
For starters, if the market continues trading higher in the short-term… I’m looking at opportunities to sell call spreads (a bearish bet).
Specifically, on stocks that have been downtrending, showing weakness, and are sensitive to current news.
Where do I see the most opportunities?
The top sectors to target are stocks in healthcare, global industries, and hyperextended tech.
But first, it’s critical you know where the market stands, and what levels traders are watching. To do that, I like to look at the SPDR S&P 500 ETF (SPY).
SPY is at a key resistance level, as you can see on the hourly chart.
However, it’s still trading around its 200-hourly simple moving average (SMA) – the green line.
And until it can make a decision… it seems range-bound for now.
However, that isn’t the case when you look at individual stocks, as I’m seeing plenty of potential juicy trades in individual stocks.
For example, check out what’s happening in Netflix (NFLX):
You can clearly see NFLX is in a downtrend.
In fact, it’s below its 200-hourly SMA… and closing in on a mega-important support level…
…and if it breaks below… watch out!
I’m also focused on placing strategic trades in stocks that have been outperforming the general market… like Five Below Inc. (FIVE).
Just take a look at the hourly chart in FIVE… it’s been on an absolute tear after the company reported strong earnings on 8/28.
Can you see the difference between the stocks mentioned above?
Now, for my highest-conviction ideas, I will be buying calls (or puts)… straight up… aiming at bringing back triple-digit returns or better.
And if that happens… I will be taking profits early because you can’t afford to hold on to positions when the overall market is so sensitive to news headlines.
Warning Alarm Heard Around the World
For example, we’ve seen an inverted yield curve (the shorter-term bond yields are lower than the longer-term)… an indicator that sometimes predicts a recession is on the way.
When you look closer at the 10-year Treasury Yield… they show levels not seen for a long time… the Fed has been printing money and throwing it at the bond market.
However, the Fed is running out of methods to stimulate the economy… and right now the big question is whether investors will forgo bonds for stock yields?
Think about it, considering bond yields in other countries are negative, where else would you park your money?
In the short-term, we could see an appetite for safe-haven stocks… like XLP, the consumer staples ETF.
… as well as in utilities, like XLU, an ETF that tracks stocks in that sector.
We’re also seeing some money flow into precious metals – like gold and silver- which investors can get involved with by trading the ETFs: GLD and SLV.
The Hyperinflated Debt Bubble Could Explode At Any Moment…
The smart money is preparing for the worst… I’m referring to a global debt bubble that can pop at any moment.
Just take a look at the corporate debt (excluding financial services companies) to real GDP.
It’s been rising significantly… and we’re at extremely high levels… as there is more than twice the amount of debt than all goods and services produced in the U.S.
That’s just in the U.S. alone…
… when you look at the world-view… there is over $17T in total debt that’s yielding negative interest rates…
… and it looks like it’s a bond bubble that’s just expanding continuously… until one point it inflates too much and pops – unleashing the floodgates of sellers.
You’re probably wondering, Jeff how can a bond have a negative yield?
Well, when a trader buys a bond for more than its face value… then we see negative yields.
Basically, if the total amount of interest paid over the bond’s lifetime is less than the premium the trader paid… they actually end up losing money causing the negative yield problem.
We’re seeing a lot of that happen now… as many traders and hedge large funds are throwing money into bonds because they think it’s safe… in fact, many are willing to pay a premium and forgo returns because they need a safe way to park their cash.
What they’re not thinking about is the impact it will have on the overall market… and what can happen if the debt bubble pops.
Right now, the safe thing to do is stick to your guns and only focus on your best ideas… that’s what I’ll be doing. I’m going to play it safe and focus on short-term trades and sticking to my Bullseye strategy.
I’m going to continue to focus on the macro view as well, and I’m going to wait for clear signals in my charts – whether this all dies down and we return to normalcy… or if this bubble pops, I’ll be ready to pounce.