Legendary Stock-Picker Predicts Best-Performing Stock of 2020

Jeff Bishop: Will rising Coronavirus cases derail the market?

This week’s jump puts the news in perspective, taking an objective look at the facts and offering several scenarios. We’ll also take a look at the recent polling and what that means for the markets.

It’s incredible how much can change in a few days.

Consumer spending rose, Americans returned to work…and then IT happened.

Coronavirus cases shot up in Texas and Florida.

Reluctantly, governors hit the brakes on reopening, with a couple of states even retrenching.

This week’s jump puts the news in perspective, taking an objective look at the facts and offering several scenarios.

We’ll also take a look at the recent polling and what that means for the markets.

And not to be left behind, I’ll give you some insight into markets often trade into holidays with waning volume.


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Economic recovery risk

We knew the possibility existed of a virus resurgence. Many hoped that summer months would tame the spread.

Now, we know that even the best-laid plans rely on our adherence to them, something that’s become a political problem in a few places.

I don’t pick on Texas and Florida for any reason other than they’re the epicenter of the current news cycle as well as states with large populations. Both chose to reopen quicker than many other states.

In Florida, restless youth left their homes to meet with friends, leading to an explosion in new cases, particularly among younger persons.

Florida COVID Dashboard

Similarly, Texas found that the new infections skewed towards the younger demographic.

As it stands, hospitalizations increased, but not as drastically as the data would suggest. New cases haven’t increased the need, suggesting that initial findings that younger individuals could tolerate the disease better.

However, they don’t live in a bubble, with widespread concern they will eventually infect their households.

All of this led to bars closing in both states, though no additional mandates have been implemented yet.

Without a vaccine, the push and pull between opening and pausing economies will continue until herd immunity is reached – if that is a possibility.

Current estimates show Florida’s peak from the recent wave towards the middle to end of July.

With a market priced to perfection, supported mainly by Fed dollars, stock prices will rely entirely on their intervention to bridge the gap. The question is how far and long is the Fed willing to support stocks.

As we get the Fed minutes this week, look for any dissension in the ranks. I expect the longer this drags on, the more vocal hawks become, favoring natural price discovery over an ever-expanding balance sheet.

Let’s not forget that the pandemic ties directly into the upcoming election, which is anything but decided.


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Millionaire Trader Reveals Top Trade Idea Each Week

RagingBull.com CEO, Jeff Bishop, shares his top pick for the week each Monday, straight to your inbox.

“My strategy aims to help you pull one winner out of the market each week, regardless of market conditions!” – Jeff Bishop

Click Here!


Election mayhem

Without question, the upcoming elections will be one of the most controversial in history. Several states already began expanding mail-in voting, while others refuse.

No one knows how the pandemic will affect voter turnout. But if the primaries are any indication, it could be several days before we know the results of local and national elections.

For all you youngins, this isn’t our first rodeo. The 2000’s election took weeks to tie up. Which, while controversial in its own right, still ended with most of us coming together.

This one is shaping up to be a nail biter.

Recent polling shows Joe Biden well ahead of Donald Trump both nationally and in critical swing states.

We know that polling failed us in 2016. However, there are a few points most people gloss over.

First, the national polls were generally correct. They showed Hillary Clinton with a slight edge in the popular vote. That just didn’t translate into the electoral college.

Second, the majority of state-level polls still landed within the margin of error. At the moment, several states show a gap outside of that margin, meaning it would be a statistical aberration based on current polling.

And, as the pandemic and protests continue, the core rallies that solidified Trump’s base come into question.

That’s not to say any of this is a foregone conclusion for either side – far from it. What the data says, combined with the macroeconomic picture, is that President Trump is currently at a disadvantage, both from a weakened economy as well as civil unrest.

There are still several months and a VP pick to go, so anything is possible.

Plus, it appears we won’t see an agreement on additional stimulus. Those benefits start to run out in July, and that could really curtail any economic growth.

So let’s light stuff on fire!

Leading into the July 4th holiday, I expect trading volume to shrink. Like many of us, Wall Street heads out early for the holiday, leaving the juniors and the computers to manage the books.

Lower volume often leads to more volatility and current trends continuing. During bull market runs, we often see stocks float higher.

With recent declines, it’s possible to get some real moves like what led into Christmas 2018.

Right now, I’m preparing a plan for my Bullseye Trade of the week. Laying out my best trading idea, I see a couple of places that look ripe to make an explosive move.

So what is Bullseye Trades?

Click here to find out more.

Stocks I want to bet against this week…

TTD, CAT, TDOC, SC, DFS, PENN, SHOP, AVLR, IWM

Stocks I want to buy this week…

MJ, DKNG, FSLY, PYPL, OKTA, ZM, TWLO, MTCH, NOW, CVNA, SIX, ABT, SPCE, GAN, SPOT, REGN, KWEB, ECL, CARR, TW, GMBL, GDX, EXPE, RNG, WYNN, WORK, NEM, CLX, EBAY, VAPO, NKLA, CTXS, GOOGL, MDB, DPZ, COUP, WK

This Week’s Calendar

Monday, June 29th

  • 10:00 AM EST – Pending Home Sales May
  • 10:00 AM EST – Dallas Fed Manufacturing June
  • Major earnings: Herman Miller (MLHR), Micron Technologies (MU)

Tuesday, June 30th

  • 7:45 AM EST – ICSC Weekly Retail Sales
  • 9:00 AM EST – S&P CoreLogic Case Shiller April
  • 9:45 AM EST – Chicago PMI June
  • 10:00 AM EST – Consumer Confidence June
  • 4:30 PM EST – API Weekly Inventory Data
  • Major earnings: Conagra Brands Inc (CAG), FedEx Corp (FDX), Pebblebrook Hotel Trust (PEB), Steelcase Inc’A’ (SCS)

Wednesday, July 1st

  • 7:00 AM EST – MBA Mortgage Applications Data
  • 9:45 AM EST – Markit US Manufacturing PMI June
  • 10:00 AM EST – Construction Spending May
  • 10:00 AM EST – ISM Manufacturing June
  • 10:30 AM EST – Weekly DOE Inventory Data
  • 2:00 PM EST – FOMC Minutes
  • Major earnings: Genl Mills (GIS), Macy’s, Inc. (M)

Thursday, July 2nd

  • 8:30 AM EST – Weekly Jobless & Continuing Claims
  • 8:30 AM EST – Unemployment & Jobs Number June
  • 10:00 AM EST – Factory Orders & Durable Goods May
  • 10:30 AM EST – EIA Natural Gas Inventory Data
  • 11:00 AM EST – Kansas City Fed Manufacturing Activity for June
  • Major earnings: None of note

Friday, July 3rd

  • Markets closed for Independence Day

Source: TotalAlphaTrading.com | Original Link

Jeff Bishop Ultimate Beginner’s Guide to Options Trading

While we focused on the stock collapse in March, banks feared a freeze in credit markets.

That’s when the Fed stepped in to purchase everything from treasuries to junk bond ETFs.

Now the Fed is cutting purchases, and MARKETS AREN’T PREPARED!

But you will be when I explain what’s going on and which ETFs are in danger.

You see, normally investors hide money in bonds and ETFs when stocks are falling, thinking it’s a ‘safe’ place to park cash.

When the Fed said they’d buy bonds, it caused ETFs like the TLT to spike – which allowed me to cash in with some strategic option plays.

I wouldn’t be so quick to take this trade again.

But now, the Fed is stepping back from the table, and bonds could be in for a rough ride.

It’s not just TLT, but junk bond ETFs like HYG and JNK are in the crosshairs, and here’s why.

Why the Fed was the only buyer in town?

Imagine you were a banker deciding who and when to loan. Sitting in your office, you flip on CNBC and watch markets start to crash in early March. Companies from Boeing to Six Flags are shutting down operations for months, and who knows what they’ll look like when they reopen.

Suddenly, your phone rings. It’s a call from the CEO of one of a local business that does event planning. They’re desperate for a loan to keep them afloat, even though they don’t know when they’ll be up and running nor what it will look like.

Ask yourself, would you lend to this company?


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Millionaire Trader Reveals Top Trade Idea Each Week

RagingBull.com CEO, Jeff Bishop, shares his top pick for the week each Monday, straight to your inbox.

“My strategy aims to help you pull one winner out of the market each week, regardless of market conditions!” – Jeff Bishop

Click Here!


Even if they had been a customer of yours for 30 years?

That’s the dilemma banks faced in March. Delta airlines has been around longer than most of the bank executives have had jobs. Yet, how do you lend a company money when they aren’t doing…well anything?

Insert the Fed. Jerome Powel and central bankers took their unlimited buying power purse and bought up these corporate bonds to keep lending moving.

Now bankers weren’t as afraid to buy the debt, knowing the Fed had their backs.

This led to a massive increase in the Fed’s balance sheet as seen below.

Back during the Great Recession, the Fed took two years to double its balance sheet. This time they did it in a matter of months.

The big change was they began to buy corporate debt including junk bonds. And in a special twist, they stepped in to buy some of the ETFs in the sector.

So now that we’ve got a handle on what’s happened, let’s discuss what’s going on and how to trade it.

Cutting back on purchases

While the Fed took unprecedented steps, they claim they aren’t in the business of picking winners and losers – which they effectively did anyways.

Even though they said they would do what’s necessary to prop up the market, the Fed began scaling back their purchases.

Here’s their schedule from the end of last year until now.

Fed purchase plans

In March, the Fed ramped up purchases from $37 billion to $75 billion. Then, they soared to $300 billion. By mid-April, they were still buying $150 billion.

Now, you can see they’ve curtailed the purchases down to the same levels that they had back before the crisis. That leaves the debt markets at the mercy of supply and demand.

Remember, the U.S. Treasury is flooding the market with debt to cover the recent stimulus package, let alone a second one.

All this raises the interesting question – can the debt market support itself?


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Jeff Bishop Ultimate Beginner’s Guide to Options Trading

No…it cannot.

In fact, this could be a catalyst to send stocks lower. And when you have stocks and bonds heading south at the same time, that’s a problem.

As traders, we need to know what to avoid and where money can be made.

Here are some of my thoughts on some major ETFs.

  • TLT – This ETF tracks long-term bond prices. If we get a selloff in bonds, this will be one of the biggest ETFs hit. Fortunately, traders can play the TBT, which is the inverse ETF.
  • JNK & HYG – Both of these ETFs track junk bonds, which benefited heavily from the Fed involvement. Both of these are pretty liquid for stocks and options.
  • AGG – This aggregate bond ETF is one of the most liquid and recovered solidly off the lows. However, its trading range isn’t large but could be a good place to sell call credit spreads.
  • LQD – Coprorpate debt got a boost from the Fed’s actions, ramping back to its recent highs. Like AGG, it doesn’t have a wide range but may suffer when the Fed pulls back.
  • BNDX – Many international bonds are priced or tied to the U.S. dollar in some way. If U.S. bonds start to tank, an international bond ETF like BNDX won’t hold up.

Whatever trade I take in this sector, I plan to deploy a wide arsenal of option strategies.

Some of these exact strategies can be found in my Ultimate Beginner’s Guide to Options Trading.

Even if you’re a seasoned trader, THIS is the market you want to refresh your knowledge and skills.

Click here to watch my Ultimate Beginner’s Guide to Options Trading.

Source: TotalAlphaTrading.com | Original Link

Jeff Bishop Total Alpha Trading Lesson: Trading Options during Earnings

A long time ago, on a trading platform far far away, I thought it would be a great idea to buy options right before earnings. Let’s just say I learned my lesson the hard way.  It’s one of the rookie mistakes traders make, and today I want to help you avoid it.


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Trading Options during Earnings

I get a lot of new traders in Total Alpha that don’t understand how options trade around earnings.

But that is all about to change after I explain to you the ins and outs of trading options during earnings.

After we’re finished you’ll realize that the juice is not worth the squeeze.

Options & Earnings

If you get nothing else from this article, it should be this – option premiums rise into earnings and fall immediately thereafter in the vast majority of instances.

Now, let’s understand why this happens.

Option prices come from three components – time until expiration, the distance of the strike to the current price, and implied volatility.

The first two of these are pretty easy to understand. The longer you have until expiration, the costlier the option. As you get closer to expiration, the time decay component speeds up at an exponential rate.

Distance to the strike changes as the stock moves around over time.

The third component is the one I want to focus on – implied volatility.

Implied volatility is the annualized percentage change expectation in share price. I say annualized because they may expect only a 1% move in the upcoming week, but annualized it might be 12%. As traders, we tend to discuss both.

What most people don’t realize is implied volatility is actually demand of options. The greater the demand, the higher the implied volatility, and the costlier options become.

Once you think about it, it intuitively makes sense why implied volatility rises into earnings and falls immediately afterward. Earnings typically provide information for investors to make their decisions. Otherwise, they don’t get much during the quarter.

However, traders really don’t know whether the stock will move higher or lower. So, we tend to see both calls and puts get more expensive.

Using Earnings To Your Advantage Part 1

There are two great ways to take advantage of this earnings nuance. The first is straightforward, the second not as simple.

Consider for a moment the facts we know – option prices rise into earnings and fall afterward, all things being equal.

So, if I want to go long puts or calls on any stock near earnings, I can use this to give me an edge.

Here’s how it works using Wayfair (W) as an example.

First, I start with an hourly chart setup.

W Hourly Chart

For any trade I take, there has to be a setup underpinning the entire play. I won’t take a run into earnings by itself.

Now, this is a play on Wayfair (W), who has earnings coming up shortly. You can see how I identified my stop, with my target as either a symmetrical move higher, or roughly $100.

On May 5th, Wayfair will report it’s quarterly results. So, I want to pick an options contract that expires beyond May 5th.

Remember, I want to be out of the trade before earnings. However, I just want to use the increase in implied volatility to give me an edge.

So, as long as I pick options that expire after that date and exit the trade prior to earnings, I’ll be fine.

That way, as we get closer to earnings, implied volatility increases and so does the price of the option.

Using Earnings To Your Advantage Part 2

The second way to use earnings for options is a bit trickier and not something I typically do. However, it’s an interesting play worth talking about.

Before every earnings, you can determine what the implied move is based on the at-the-money options contracts. It’s a pretty simple formula.

  • Take the closest at-the-money put and call option
  • Add the two together
  • Multiply by 85%

Now that you have this information, here comes the fun part (though it takes some work). You can look back and find the average move for the stock after earnings going back however many years you choose.

For example, let’s say that Apple moves 10% on average after earnings. However, the implied volatility expects a 20% move.

From there, you can create an options strategy that takes advantage of the likely overstatement of implied volatility versus what we’re likely to see. Normally, this involves selling out of the money options such as credit spreads or iron condors.

The Options Masterclass

One of the best ways to learn all the tricks with options is through my upcoming options Masterclass. You’ll get all my best tricks and tips I’ve accumulated through the years.

Click here to learn more about my options Masterclass.

Jeff Bishop Total Alpha Trading: How You Can Use The Money Pattern To Cash In Right Now

Every successful trader has their one go-to strategy.

My favorite setup – the money pattern.

Just the other day I was able to put its full force behind some trades that delivered some humongous profits during the face-melting rally.

Nothing to see here, just one trade paying for a year’s worth of Total Alpha and then some!

Yes, despite all the uncertainty and headline risk we have in stocks.

The money pattern still comes out to play.

Today I’m going to show you how it works, and most importantly, how you can start applying it for bigger and better trading results.

This is a lesson you can’t afford to miss.

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What is the money-pattern

Years ago, I found out that I preferred swing trading over day trading. Part of that came from my discovery of the money-pattern.

The money-pattern uses an hourly chart and two moving averages: 13-period simple moving average and the 30-period simple moving average.

What I’m looking for is where the two crossover. However, it can’t just be any old crossover. I want to see the crossover happen after the two haven’t touched in at least a couple of weeks. The longer they’ve been apart, the better.

Here’s an example with the SPY chart.

SPY Hourly Chart

I highlighted three different areas where the two crossed paths. The first one is right before markets took their faceplant. The second is when they did a little fakeout in early March. The third is the true money-pattern crossover that signaled a direction change in the market.

You’re probably wondering why it didn’t work in the second circle. It did, in fact, work for a day or so. However, it hadn’t been that long since the averages last touched. Compare that to the last crossover that was over three weeks later.

What does it tell us

The money-pattern isn’t some magic formula that I have a patent on. It’s a combination of a slow-moving average and a fast-moving average. There are dozens of combinations that work just as well.

For example, Nathan Bear’s Weekly Money Multiplier uses an 8-period exponential moving average and a 21-period exponential moving average.

All of this rests on a simple premise; the slower average shows the larger trend, while the quicker one indicates recent price action. When they move in different directions, it tends to mean that enough pressure has come in to stop the longer-term trend.

Note: This doesn’t apply in sideways markets.

How I applied It to my trades

Earlier I brought up my FireEye (FEYE) trade. I want to show you how I used the money-pattern to create a trade for my Bullseye Trade of the week and Total Alpha.

Let’s take a look at the hourly chart pattern.

In this chart that I sent out, I noted the crossover setup that I saw. Notice how this occurred long before the market actually found its bottom.

That’s what makes this so powerful – the pattern becomes more important than a plunging market!

In order to get into the trade, I waited for the stock to pull back into the moving averages. That’s a common way I’ll get into the trade with stops below the recent consolidation area (which is noted by the blue line on the chart).

Stocks that show promise right now

Let’s take a look at a few stocks that give the money-pattern crossover and look to be good pickups.

We’ll start by taking a look at the makers of cake snacks, Hostess (TWNK).

TWNK Hourly Chart

I like this play for a few reasons. First, the crossover just occurred, so it hasn’t had a chance to play out. Second, it’s making a nice consolidation pattern here right on top of the 13-period moving average. Lastly, it’s a consumer staple product. With everyone stuck at home, they’re either drinking or eating snacks.

Here’s one I’m watching as a potential bearish play. Check out the chart for Lululemon (LULU).

LULU Hourly Chart

LULU is about to have a bearish crossover. Although this hasn’t had as much time as I would typically want, the stock has a lot going against it. Retailers are taking it on the chin in this environment plus it’s right up near the 200-period moving average that also acts as resistance.

Add to all of that it closed multiple hours and then the day below both moving averages!

Learn through practice

Look for these patterns and study them. See how they work in different market environments and contexts. Make repetition your friend.

One of the best ways to cut the learning curve is to watch a mentor trade through these markets. That’s where Total Alpha comes in.

You can get a live feed of my portfolio streamed right to your desktop along with tons of education and training.

Click here to learn more.

Source: TotalAlphaTrading.com | Original Link