You See a Pullback — I See Opportunity!
The market finally experienced a little pullback this week following months of melt-up momentum. But I’m not sweating this action at all…
Because, in my world, volatility equals opportunity!
Every time in history that the market has experienced a sell off, it has rallied and gained back those losses. I feel pretty confident about those odds…
So when the market sees some downward action, I see opportunities to buy!
Plus, it’s all about strategy and money management. I’m not in the business of buying stocks and holding for years. I buy limited risk, in-the-money call options with enough time left to take advantage of the bullish momentum.
This strategy lets a modest move in the stock generate outsized returns on the options, giving us 50%, 75%, and even 100%+ returns in no time flat!
How long would you have to hold a stock for a 50% return? The answer is too long!
Bottom line: Today’s market is filled with opportunities for short-term traders. Don’t miss out on the action!
Keep it In the Money,
Chart of the Day: The other side of the “reopen trade”
Earlier this week, I discussed the resurgence of the “reopen trade” as vaccine optimism and a return to normal life starts to become top of mind for investors.
I even highlighted the bullish setup in the US Global Jets ETF (NYSE:JETS) as the ETF started to break out to post pandemic highs.
But there are consequences to these reopen stocks breaking out…
Just look at the work-from-home group.
Pandemic favorite Peloton Interactive Inc. (NASDAQ:PTON) isn’t having a great month. This former superstar momentum trade is losing steam and has dropped a quick 15% from last month’s highs. Breaking below $135 could spell more trouble for the interactive home workout stock.
Just take a look at this chart:
Peloton has posted an amazing rally since its March lows. But a breakdown at these levels followed by further downside wouldn’t surprise me at all.
Don’t get me wrong — I don’t think Peloton is a zero. This is a strong, growing company! It just flew a little too close to the sun. A hard reset might once again set it up for strong gains.
— Greg Guenthner