From earnings season hits and misses to interest rate drama, the past few weeks have left many increasingly uncertain about what the future holds.
In this week’s episode of The Profit Strategies Podcast, Chris Johnson and I discuss our thoughts on buying commodities and analyze our put selling strategy given this current market climate.
We also share our outlook on the growing momentum behind microcurrencies and our consumer spending predictions in a post-pandemic world.
I get asked all the time, “What are the best stocks to trade right now?”
The truth is that there are always hot and cold stocks AND what’s hot today can be cold tomorrow. Timing is the key.
Although there are many ways to find the best stocks, one of the best ways is to simply check to see which stocks are moving up or down the most. Yes, you guessed it. I have scanners that do just that.
And I’m about to give you 20 free picks, courtesy of my very latest technical analysis…
About two weeks ago, Chris Johnson and I discussed moving averages and how we use them to analyze trends on our Profit Strategies Podcast.
And today, I’m taking an even closer look at what makes these indicators so important.
Statically speaking, bull and bear runs are often preceded by what are known as golden or death crosses.
Such events can help us traders narrow down our next big profit opportunity right before it occurs.
That’s why, in my latest video, we’re looking at charts and going over how savvy traders use these special moving average patterns to find plays.
Without question, the most reliable and consistent trading pattern on the planet is earnings. Big things happen at and before earnings for many stocks.
Many stocks gap at earnings. Netflix (NASD: NFLX) gaps all the time.
But in particular, it gaps before and after earnings, as you can see in this chart.
When you’re trading these stocks, you may be tempted to pick direction and trade the run into earnings or even past earnings to play the gap.
If you pick direction correctly, you can bank.
Picking direction, however, is a bit like “betting on the black,” winning big if you’re right and losing big if you’re wrong.
In other words, earnings roulette. And who wants to play that?
Earnings season is off to an interesting start and I’ve got my eyes on what are known as the “FAANG” stocks.
In today’s video, I’m uncovering my simple strategy to play the earnings reports from five tech behemoths, including Facebook (FB), Amazon (AMZN), Apple (AAPL), Netflix (NFLX), and Alphabet (GOOG).
Click here to watch the video.
This week, the markets have seen quite a bit of mixed movement.
In light of this, Chris Johnson and I are back in today’s Profit Strategy Podcast, covering our thoughts on how infrastructure package uncertainty and the new stimulus checks are impacting the market. We’ll also cover a few COVID-19 updates before talking about today’s focus, moving averages.
As always, it is important to identify key indicators that explain the trading potential of any position.
The sad truth is that most traders are going to get spanked this earnings season. If you want to join them, that’s your business.
If you’d rather make money instead, read on.
Trading is all about finding reliable, repeatable historical patterns and counting on them repeating into the future. I’ve made a great living on this fact. Everything I do is based on rules-based systems that historically produce consistent profits.
The most reliable pattern by far is produced by earnings announcements. On many stocks, earnings creates gaps on specific, pre-announced dates. We have a precise triggering event on a pre-defined date. It gets no better than this.
And yet, most people play it completely wrong.
Check out the chart below on Zoom Video Communications (NASD: ZM):
The green “E” triangles are pre-announced earnings dates. Notice that over the past 3 earnings, Zoom gapped up, then down and then dropped big AFTER the announcement.
See, most people are trading earnings the wrong way. They essentially “bet on the black” by trading directionally over the earnings. They buy stock, short stock or buy calls or puts and hold over the announcement hoping that the stock moves their way.
This is a sure-fire way to get spanked.
A smarter way is to trade both directions by buying calls AND puts, creating a straddle. This is a safer way, but not the best way.
OK, you’re now wondering what’s the best way.
Demand for stocks and options is at record highs. It’s a veritable “Traders Gone Wild” environment as retail traders (that’s you and me) gobble up stocks and options. The party started in 2020 and traders are pumping up the volume with even more exuberance.
Indeed, CNBC reports that average daily volume in stocks is skyrocketing:
| Year | Stock Volume* |
|---|---|
| 2019 | 7 billion |
| 2020 | 10.9 billion |
| 2021 | 14.7 billion (so far) |
*Source: Piper Sandler
And it isn’t just stocks that are getting extra attention.
Check out how options volume has exploded over the past 2+ years:
| Year | Options Volume^ |
|---|---|
| 2019 | 1.8 billion |
| 2020 | 2.5 billion |
| 2021 | 0.9 billion (so far) |
^Source: cboe.com
Interactive Brokers’ Steve Sosnick indicates that there has been a phenomenal rise in short-term call option trades.
So, where’s all of this extra volume coming from?
Millennials.
With the advent of retail brokers like Robinhood offering $0 commissions, millennials are flooding the markets. This is evidenced by the 6-million strong Reddit community that created a massive short-squeeze, sticking it to Wall Street hedge funds.
This demand creates movement. Stocks move farther and faster than ever before. The same is true for options.
All that spells one thing…. OPPORTUNITY!.
Let me share something with you that VERY FEW traders know…not even the pros….
Every quarter, I watch traders making the same grave mistakes during earnings season.
Their timing is completely off and they’re focused on all the wrong factors.
In today’s video, Mike Wade and I uncover how traders can best prepare for earnings.
“Turn out the Lights, the Party’s Over”
This song, for me and I’m sure many of you, was made famous by Don Meredith on Monday Night Football.
This week, these words came back to me loud and clear as companies that saw major gains during quarantine began to decline.
It’s clear that the “party’s over” for these streaming, food delivery, and home-shopping stocks as the world returns to normal, and I have two ways to play this move to the downside for major profits.