Directional Traders Will Love This Lucrative Strategy

Last week, I gave you a quick quiz – three simple questions to help you determine what type of trader you are.

Many of us are directional traders, which means we assess the direction of the broader markets or individual securities, and then trade accordingly, taking long positions we believe will go up in price and short positions on securities we believe will go down in price.

Now that you’re armed with this very important piece of information, many of you have asked: What’s next? What strategies do I use now that I know I’m – say – a medium-term rules-based directional trader (like me)?

Today, I’m going to show you a simple strategy that allows you to target lucrative options trades… and it relies on a tool we’ve talked about a lot in recent weeks: The Simple Moving Average (SMA). So I hope you’ve been paying attention!

Let’s get started…

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Let’s Take Profits in an Unloved Sector

Talk about waffling!

Even though oil basically meandered over the past few weeks, it still managed to notch its ninth weekly gain in a row. The underlying stories about oil prices aren’t any different than they’ve been for weeks.

The biggest story is the glut in the amount of global supply, while a secondary concern is that the net number of rigs taken offline has now exceeded those put into service for the last 23 weeks in a row…

…and some weeks, that appears to be welcome news.

My “line in the sand of support” sits at $58 a barrel. So long as it holds there I will continue to anticipate prices eventually going higher.

All of which brings me to this post-Memorial Day case study rooted in the oil patch.

You see, when I get a buy signal in one of my analysis tools or the other, that’s all well and good, but when I get a signal on a stock across multiple signals, I tend to favor these, as they have the “stacking” effect that I love.

Stacking is when you get confirmation from several technical, fundamental, or seasonal signals.

And for today’s highlighted case study, well, we got all three…

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