While the talking heading heads and wall street “experts” on TV were debating on where the market goes next, I was busy putting my hard earned capital to work yesterday.
A market like this can make even the most experienced trader look like a rookie. That’s why everything I’m doing now has a built-in hedge in place. This allows me to go to sleep at night like a baby.
My current strategy requires just small moves in the market to make large sums of money.
That said, I had several indicators showing me that the recent sell-off in tech stocks was overdone and we could see a bounce from here.
Some might consider it a bold call given how tough to predict the market has become. However, when I sent out the trade alert to my Weekly Money Multiplier members I mentioned to them that I was going to keep my position small.
And you know what?
Just hours after the alert was sent, I was sitting on $10,000 in unrealized profits while most other traders had a losing day. My calculated bet that tech would rally was already paying off.
I didn’t just throw this position based on a hunch.
I use charts to help with my stock and ETF selection. Certain chart patterns let me know whether buyers are stepping in and supporting prices or if the sellers have control. When one side has a clear advantage, the trend is established.
Currently, the bulls and the bears are at a standstill – after several years of the bulls having their way in the market.
That said, you’ll have to keep your trade size small and be selective until a clear trend shows itself.
You might be thinking, “Jeff, this is pretty confusing, I’m not following.”
Well, it’s pretty simple.
Take a look at this chart of the PowerShares QQQ Trust (QQQ), which tracks the Nasdaq-100 Index – primarily consisting of tech stocks.
This specific pattern is highly profitable, and I’ve had a couple of home run trades using it.
This setup looks like the bulls may have momentum in the near term. You see, the QQQ has some support around $166. That said, some key moving averages look like they might be “crossing over” indicating a potential buying opportunity.
But that’s not all, there are other factors to consider. For example, when you’re trading a market ETF like SPY or QQQ, you’ll want to look at sentiment.
The easiest way to do that is looking at the Volatility Index (VIX) – the market’s “fear gauge.”
Now, you don’t have to be an expert on volatility to understand this.
For the most part, you can get away with having some general rules. For example, when the VIX is above 20, there is general fear in the market. Conversely, when the VIX is below 15, it indicates traders are complacent and greedy.
I think a move back above 21 in the VIX is a signal to head back to the sidelines. That said, if this market does turn bearish – I’m ready. In fact, I’ve made a large chunk of my stock market gains betting against the market.
Find out how I do that here – this is a one-day only event.
As mentioned, going into the weekend I’m sitting on $10K in unrealized gains with this position. Weekly Money Multiplier (WMM) members got in on this trade with me in real-time.
If you haven’t joined WMM yet, now is the time. We’re coming up with trade ideas daily that could double or even triple your money in just a few short weeks or less.
Full Disclosure: I’m long QQQ via options.
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