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Nathan Bear Weekly Money Multiplier Strategy | 3 Trades To Start Your Week

Make no mistake about it—the stock market and the economy are strong.

However, with the market sitting around all-time highs again, how much longer can we expect investors to buy up stocks?

It’s a tricky situation, to say the least.

That’s why I chose my spots carefully last week…treating each opportunity with a touch more care than normal. It kept me out of trouble and my Weekly Money Multiplier thanked me for it.

One of my best setups this week came from YETI, and it’s one of my top picks for this upcoming week.

This trade took only a few days to achieve 100%!

That said, I’ve got some brand new trade ideas for you this week—three to be exact. And while most investors will be focused on the upcoming Fed meeting— I’ll be lasered in on these three setups.

YETI (YETI)

I had my eye on YETI for quite a while. They may be a niche company, but they have a cult following. Everyone I know has at least one of their drink tumblers in their house.

Last week I alerted members of Weekly Money Multiplier to the following setup I saw in the charts.

YETI Weekly chart

Normally I play daily and intraday charts. However, this setup looked too good to pass up. It contained everything I wanted from a TPS setup.

My TPS setup pulls together three elements:

Trend – A clear trend, which in this case was a nice bullish trend upwards
Pattern – I want to see a consolidation pattern that compresses price. Here I drew out the large pennant forming.
Squeeze – Squeezes occur when Bollinger Band indicators trade inside the Keltner Channel. It tells me that volatility is shrinking.

This setup worked on the weekly chart. So I came up with three potential trades:

Long calls – This is a straight bullish bet that the pattern will play to the upside
Selling a put spread – A put spread is where you sell a put option at a strike at or near the money and then buy another one below that strike, both at the same expiration. You receive a credit for the trade. Your goal is to have the stock close above the upper strike price by expiration.
Long butterfly – Butterflies can appear to be complex trades, but are actually quite simple. They are low-cost trades with big payoffs if you can get the stock to land at the exact price you pick by expiration.

YETI has a lot of potential to push higher over the next few months. It should also offer a few opportunities to enter the trade. That lets me average in over time.

Netflix (NFLX)

Netflix provides great content, but not a solid investment. The streaming wars competition has put pressure on the stock and kept it from moving higher. That’s given me a lot of opportunities to bet against this stock.

This was a 30-minute chart I shared with Weekly Money Multiplier members this past week.

NFLX 30-minute chart

This is a TPS setup, but in reverse. I expected Netflix to ride the trendline that connected the lower points of the candlesticks. With a downward trend, I expected that it would eventually push lower and through that trendline.

I looked for two ways to play this trade. First, I could buy puts on the stock. That would give me a straight directional bet to the downside with the maximum payoff.

The second would be to sell a call spread. That’s where I sell a call option at a strike price at or above the current stock price and then buy another call option at a higher price, both with the same expiration. Like the put spread I talked about earlier, I would receive a credit for the sale.

If the stock closes below the lower call strike price by expiration I make full profit. However, I can also close the trade early at a profit. You see the price of that credit spread reduces every day until expiration. I can always buy it back early at less than I was paid and still make money. That works well if I think the stock could start moving higher.

Baker Allen Hughes (BAH)

This is a stock I was a bit bearish on a while back that worked out nicely. Now, the daily chart is showing a great TPS setup here.

BAH daily chart

You can easily pick out the nice uptrend, short-term consolidation pattern, and the squeeze at the bottom. The only concern I have is the downward momentum (as noted by the lower indicator).

However, I still think the stock could easily make a run for the recent all-time highs. It’s a great setup that could play out within a few weeks.

Those aren’t the only trades

There are plenty more where those came from. To catch all the intraday action, check out Weekly Money Multiplier. You can still get in before Monday’s opening bell.

Click here to join

Source: Ragingbull.com | Original Link

Jeff Bishop’s Total Alpha Strategy | Jump On The Week

A strong November jobs report surprised the market on Friday and sent stocks surging higher. The surprise report showed payrolls adding 266,000 jobs in November, dropping the unemployment rate to its historic low of 3.5%. The Dow gained 300 points on the number, and Apple hit an all-time high ($270.71).

The stage is now set for the upcoming Federal Reserve meeting which is scheduled for the 12th. While they are not expected to touch the key interest rate level—their comments are sure to drive the market in one direction or another.

Now, that doesn’t mean I’ve been sitting around and waiting for this Fed event.

No…No…No

In fact, it’s been business as usual for the TA portfolio:

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That said, there is plenty to go over in this issue of The Jump— I cover the economic calendar, corporate events, IPOs. As well as, my thoughts on the trade deal, current positions, and trades I’m looking to get into.

The Looming Trade Deadline

While there’s no shortage of rumors surrounding trade talks, we have yet to hear anything concrete. So far it’s one political posture after another. Yet, that all stops dead on December 15th.

Without a deal, the administration is set to raise tariffs on Chinese imports right in the middle of the Christmas season. To add insult to injury, these will directly target many of the consumer gifts purchased. While it will take a while for the pricing to roll through, it smacks of bad taste to come across as Ebenezer Scrooge.

Agricultural purchases appear to be the biggest hangup at the moment. China refuses to be tied to a specific purchase amount, something the Trump administration is dead set on. There could be other underlying problems, but it remains largely unknown.

What we do know is the closer we get to the deadline, the more rumor will be treated as fact. That means every tweet could drive the market haywire in seconds.

Impeachment Showdown

The U.S. House of Representatives plans to draw up and vote on articles of impeachment before the holiday recess. Complaints on process and procedure are largely being ignored. The narrative has become extremely partisan, with neither side backing down.

However, the Senate appears rather serious about the entire matter. Neither side wishes things to devolve into the circus that’s hung over the House. Republicans and Democrats largely agree they want a civil trial, regardless of their personal feelings.

Still, the pressure and presence of the showdown could push the president into rash decisions. That could make a budget deal difficult. But neither the administration nor congress wants a shutdown this time. If anything, they will pass a continuing resolution to fund the government at current levels.

Don’t Forget British Politics

December 12th also marks a special day for the UK to go back to the polls to see if they can break a deadlock in parliament. Polls currently show little change, which makes continuing in action all the more likely.

World’s Largest IPO

And don’t forget about the world’s largest IPO that you can’t invest in. Aramco set its public offering on December 11th. With an estimated value of $1.7 trillion. That also comes on the back of news OPEC and some non-members working to hammer out an agreement to keep oil production in check in a bid to raise prices.

On watch…

Call spreads

NFLX, AMZN, TEAM, FB, CVNA, AMD, PTON

Put spreads

TWTR, WYNN, FANG, EXAS, TPX, BIIB, COST, NKE, TSLA, ULTA, ZS, CMG, SMG, IWM, GOGO, AMZN, HUBS

Want even more trade ideas?

Click here to learn more about Total Alpha

Next Week’s Calendar

Monday, December 9th

Major earnings: MDB (Mongo Database), TOL (Toll Brothers), SFIX (Stich Fix)

Tuesday, December 10th

4:30 PM EST – API Weekly Inventory Data
Major Earnings: AZO (Autozone), HDS (Home Depot Supply), PLAY (Dave & Busters), GME (Gamestop)

Wednesday, December 11th

7:00 AM EST – MBA Mortgage Applications
8:30 AM EST – Consumer Price Index – Looking at any signs of inflation
10:30 AM EST – Weekly DOE Inventory Data
2:00 PM EST – Fed Decision – It’s not what they do, but what they say
Major earnings: AEO (American Eagle), PLCE (Children’s Place), UNFI (United Natural Foods), VRA (Vera Bradley), TLRD (Tailored Brands)

Thursday, December 12th

8:30 AM EST – Weekly jobless claims and continuing claims
8:30 AM EST – Producer Price Index
10:30 AM EST – Weekly EIA Natural Gas Inventories
Major earnings: CIEN (Ciena Corp), ADBE (Adobe), AVGO (Broadcom), COST (Costco), ORCL (Oracle)

Friday, December 13th

8:30 AM EST – Import & Export prices for November
8:30 AM EST – November Retail Sales – Good look at how we did to start the shopping season
1:00 PM EST – Baker Hughes Weekly Rig Count

Major IPOs This Week

Bill.com Holdings (BILL) 8.8M shares expected to price between $16-$18
OncConnect Financial (OCFT) 36M shares expected to price between $12-$14
Sprout Social (SPT) 8.823M shares expected to price between $16-$18
XP Inc. (XP) 72.5M shares expected to price between $22-$25

Click Here to Join Total Alpha (watch this webinar – BEST OFFER HERE!!!)

Source: TotalAlphaTrading.com | Original Link

This Gold Loophole Could Help You Save on Taxes

By Grant Wasylik, analyst, Palm Beach Daily

Most people don’t know this… But there’s a way to turn losses on your gold holdings into immediate tax savings – without losing possession of your precious metals.

It involves a loophole under Section 1091 of the IRS code. It’s known as the “wash-sale rule.”

A wash sale is when an investor sells a security at a loss to claim a tax write-off… only to repurchase the same (or nearly identical) security within 30 days of the sale.

Now, the IRS prohibits such sales. However, its rules don’t cover “precious metals.”

This means they’re not subject to a holding period for tax-swap sales.

So if you’re sitting on losses on gold bars, numismatic coins, or silver, you’ll want to take advantage of this loophole before the end of the year. And I’ll show you how.

But first…

It could be a very, merry Christmas for you and your loved ones this year…

Here’s why…

On Wednesday, December 11th, this Market Wizard and retired billion-dollar hedge fund manager will show you the secret he used to generate over $270 million in profit over an 8-year period…

You can use the same secret to generate over $200,000 this year (or more), according to this individual.

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“Wash” Your Gold or Silver

I wanted to find out why conducting a wash sale now would be good for precious metals owners. So I spoke to some of the top precious metals dealers in the country.

Rich Checkan is president and chief operating officer of Asset Strategies International. It’s one of the most reputable precious metals dealers in the country.

Here’s what he told me:

Now is a particularly good time to consider this strategy. Gold is about midway between its 10-year high and low. And over the last decade, silver is nearly 10 times closer to its low.

Why is that important? It’s simple. The lower the price when you execute a tax swap, the bigger the tax advantage, and the smaller the cost to capture it.

And if you act quickly, you should be able to put this to work this tax year.

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Here’s an example of how it works…

Let’s say you bought an MS-64 $20 Saint-Gaudens gold coin for $2,200 per ounce in 2010. Today, those coins are worth about $1,581.

Under the wash-sale loophole, you could sell your coins at the current market price… and then immediately repurchase them for the same price.

In this hypothetical transaction, you’d realize a taxable loss of $691 per coin – which will lower your 2019 tax bill. But you’d still be able to keep your coins.

Now, there’s a transaction fee on the sale (1–4% on numismatics and 1–2% on bullion), and the shipping costs. So you’ll want to make sure these costs are less than what you’ll write off in taxes.

Plus, if you don’t use up all your losses this year, you can roll them forward into future tax years. And if you don’t have an offsetting gain, you can still take up to a $3,000 loss in the current year.

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How to Execute a Tax Swap

Remember, this information is for general tax purposes only. We strongly encourage you to consult your accountant or tax adviser before making a tax swap.

If you do, here are the steps you should take:

Talk to your tax adviser: Tell them what you’re contemplating. Could you use some losses to offset gains on a one-for-one basis? There’s a chance your CPA may not even know this avenue exists.
Contact a gold dealer: We recommend Asset Strategies International or David Hall Rare Coins. Both can help you decide if a precious metals tax swap makes sense. Remember to do your due diligence. (Note: PBRG doesn’t receive any compensation for recommending these dealers.)
Know your situation: Before you reach out, you’ll need to know the types of precious metals you own, the quantity, the price you paid, your tax bracket, etc.

And if you’re ready to make the swap after talking to your tax consultant and a dealer, here’s a preview of what comes next…

You’ll have to physically mail your coins to a dealer. Dealers can “fix” the price. This means they can immediately arrange a buy-and-sell order on the same day.

If coin values spike in transit, you can have the dealer mail them back to you. No harm, no foul.

This tax loophole allows you to benefit from falling precious metals’ prices (in the past or in the future). And you’ll still be able to keep the exact same metals you started with… just with a new cost basis.

Be sure to act before the end of the year if you want to use any losses for 2019.

What would you buy if you can easily earn an extra $200 per week? $500? Maybe even $1,000?

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Jeff Bishop’s Total Alpha Program | Navigating the Tariff Trade

Make no mistake about it, there has been a lot of talk about tariffs this year—learning more about them will only make you a better trader. After all, it never hurts to understand the headlines driving the market.

Why?

Because trading off the wrong headline can cost you money.

For example, stocks came off all-time highs last week but fizzled after it appeared that we wouldn’t be close to reaching a trade deal with China.

So when the sell-off hit Monday, I stepped in to buy the market for a quick trade.

This was the view of my Total Alpha account midweek

But before I get ahead of myself, and explain how you can profit off the tariff news. It’s important that we go over the basics first, understand what tariffs are on what their impact on the global economy is.

Tariff 101

Chances are you haven’t heard the term tariff thrown around this much since you studied American History in high school.

Remember the Boston Tea Party? A little tariff imposed on America was one of the few triggers that started the American Revolution…3 pennies per pound.

Well, brace your yourself. It’s the end of the decade and the future in front of us seems to hold new tariffs as well as a war of the trading variety.

A tariff is a government tax on imported goods. The result is the price of foreign goods gets higher.

The usual reasoning behind tariffs is that countries use them to either limit imported goods or to even out the pricing between foreign and domestic products. Sometimes both.

Why Is Tariffs News Now?

The U.S President made plans to hike tariffs billions of dollars’ worth of China’s imports, steel imports from Japan, Eastern Europe, and several other countries, as well as threatened tariffs on German autos. He delivered these under the authority granted to him under the heading of national security risks. This even extended to American dairy.

Chinese imports undercut two major industries in the U.S. The result is the U.S. margins are getting driven down constantly and the U.S. market is flooded with China’s goods. There’s also been an ongoing issue with intellectual property theft that’s been a headache for decades.

The belief behind the tariffs is two-fold. First, it evens the playing field for subsidized industries in other countries, including Chinese businesses. Second, it provides leverage for the administration to demand controls on intellectual property theft.

Deep In Bed With China

Last year the U.S. imported $540 billion worth of goods from China. A majority of what we imported were cellphones, computers, and what’s on your body and feet. In return, China imported only $120 billion of U.S. goods. Putting a spotlight on how far from a 2-way street we are. And this has been happening for years!

To top it off, China OWNS 28% of the U.S. debt it owes to foreign countries, making it one of the largest foreign investors in U.S. treasuries.

But wait, there’s more! As of this spring, China owned $1.1 trillion of the U.S. debt.

The Tariff Effect

So, what do these tariffs mean for us, billions of dollars on Chinese goods?

Initially, it raised prices on most consumer goods. I expect retail prices to climb, causing sales to drop. Low wage growth makes exacerbates this dilemma.

But American companies can’t keep up with the low prices of Chinese products. Labor costs make China more competitive for resource-intensive goods. They are forced to choose between lower margins or finding cost offsets.

Yet we may not be able to handle the demand. U.S. steel production has declined over the last 50+ years. That reduced overall production capacity. It’s not a simple matter to turn on production that offsets the imports.

Brace Yourself

For years and a couple of presidents, Americans were told more jobs are coming. But with higher tariffs looming, many companies would rather cut costs at home than pass that cost on to the consumer. This means fewer jobs which adds fuel to speculation of a possible recession.

In the meantime, everyone is waiting to see if December tariffs get signed. There is a very real chance they won’t be, at least this year, mainly due to the impending election year on our heels. These tariffs could hurt our president’s reelection odds if things take a turn for the worst.

There is no deadline set for the trade deal, just that it will be completed when the president is good and ready.

China isn’t the only country in the cross-hairs of tariffs of the future. Brazil and Argentina are potential targets. Just this month our president tweeted “Brazil and Argentina have been presiding over a massive devaluation of their currencies. which is not good for our farmers. Therefore, effective immediately, I will restore the Tariffs on all Steel & Aluminum that is shipped into the U.S. from those countries.”

How to Navigate

Steel companies leveraged to U.S. production benefit from protectionist measures. Make sure you understand which ones manufacture in the U.S. versus outside. Those with greater global exposure are more unpredictable.

Chinese American Depository Receipt (ADR) trade directly with the hopes of a deal. Companies like Alibaba and JD.com move higher on lower tariffs. Lower tariffs increase U.S. consumption of Chinese goods. This leads to higher GDP outputs, which in turn drives growth in these Chinese companies.

It remains unclear if the U.S. economy will sustain long-term damage from the tariffs. So far, it’s shown solid growth in the face of global stagnation. For now, I focus only on news that states a deal is or is not done, and nothing in between.

Catch the trades in real-time

Total Alpha members get to watch how I play these minute by minute. They saw me crush a $71,000 trade just the other week.

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Source: TotalAlphaTrading.com | Original Link

Nathan Bear Weekly Money Multiplier Strategy | Turning a Profit – Stop Management

It doesn’t matter… you can be the world’s greatest stock-picker

But if you don’t know how to manage a trade then it won’t do you any good…

Proper trade management goes beyond the basic mantra: let winners run and cut your losers short.

Through experience and mentorship, you’ll learn that you have specific tools at your disposal.

For example, stock traders will use stop orders to ensure they are closed out of a long position if the stock price drops below a certain level.

The stop is there to protect you from further damage.

However, when you are trading options—setting stop orders is not as efficient.

That’s why I’m going to be spending this Sunday with you talking about stops. This lesson is essential if you’re currently: unprofitable or break-even.

Follow the steps I lay out, and it will jump you ahead of the pack— and on the path to becoming a consistently profitable trader.

The Unprofitable Trader

Problem – No stop loss

Tell me if this sounds familiar. You find yourself in a losing trade, and you have no idea how you got there. Worse yet, you don’t know what to do.

Everyone wants to start earning money day one, trade one. It’s just not that simple. You can’t take a few lessons at a driving range and then compete in a golf tournament. Both of these things take practice.

Newer traders jump into entries without any idea of where they plan to exit the trade, either at a stop or a target. A lot of that stems from an incomplete strategy. And every strategy needs a foundation rooted in stop order management.

Solution – Write down your stops and send these orders in immediately after you enter a trade

Before you click the mouse, you should be able to list out your target and your stop. These should be precise, unambiguous levels.

Note: It is ok to use percentage losses if that works with your strategy. However, these still have exact price levels!

Here is a chart I used for a Weekly Money Multiplier Members trade:

See how I listed out my stops and targets before I entered the trade? You should be able to write it out clearly as if you were sending an email to your subscribers.

Here is a trick that will help you limit your losses. Enter your stop orders immediately after you enter your trade. I’m talking about within a minute. Get it into the system and leave it. Do not touch it.

It takes more discipline than a Shaolin Monk to watch your stop hit. Trust me…you need to accept the pain. This saves you money in the long run and mental anguish.

The Breakeven Trader

Problem – Stops get hit, and the stock takes off

This problem caused me to snap a few pencils. I would be in a trade, and my stop got hit. It happens, no big deal. But then the stock would take off immediately after…or maybe an hour later

Did they know my stop was there? Did they intentionally hit it?

Actually, they probably did. Big money traders work markets every day to trip stop orders. It may seem unfair. But it’s not illegal, and it’s common.

The market, especially the intraday trading, isn’t designed for small retail investors like you and me. It’s meant for big money to operate. So if we want to hang around, we need to play by their rules.

Solution – Use candle closes

I want to highlight my notes from the Weekly Money Multiplier chart.

Candle closes help you avoid getting whipped out of trades prematurely. Intraday action can go all over the place. But, it takes a lot more money to move stock for an entire day (and that holds especially true for weekly closes).

Rather than set your trades as immediate stops, use candle closes to exit trades. The time-frame you use should match your setup time-frame. If you want to be extra sure, use a double candle close below the level.

The Profitable Trader

Problem – A stock moves massively past your stop, causing excessive losses

Sometimes the market moves violently. It comes from a tweet, a data point, or just out of nowhere. It sends everything into a tailspin. Or maybe it’s just stock-specific news that blows your stock up overnight.

Whatever the case, it can and will happen. It’s just a matter of time. These don’t occur often. But when they do, it can devastate your trade, wiping out days, weeks if not an entire month of gains.

Even with the best advice, you will always have this risk. But, you can minimize the chances and impact of it occurring.

Solution – Adjust your stops with stock or market conditions

You want to consider three factors for adjusting your stops: market, sector, and stock conditions.

Imagine you have two $30 stocks with the exact same setup. Why would you want to make one stop wider than the other?

If one stock has higher volatility (IE moves more on average), it makes sense to assume it might push past your stop more than the other.

Similarly, when the market is moving around like a tornado, you can expect that the market will trade past your stops more than if it were a quiet Friday afternoon.

Work on your trading at every level

As a guru trader at Raging Bull, I take my member’s concerns seriously. Their experience is what matters most. I regularly solicit feedback to understand their obstacles, turning these into plans that get them to the next step.

I want to help them become profitable traders, no matter their skill level. And it’s something I want to offer you.

If you want to learn more about becoming a Weekly Money Multiplier member click here.

Source: Ragingbull.com | Original Link

Mastering the ‘Second Level’ Is Key for Your Investment Success

By Porter Stansberry and the Stansberry’s Credit Opportunities team

Howard Marks is extremely good at being in the right place at the right time…

Marks is probably the world’s greatest distressed-debt investor. He buys the debt of companies when it trades for pennies on the dollar… then profits when the companies are able to pay off the debt.

His timing has been impeccable. In March 2008, for example, Marks raised more than $10 billion to invest in distressed debt. Up to that point, it was the largest distressed-debt fund ever.

Just six months after Marks began amassing his war chest… the investment bank Lehman Brothers collapsed, taking the debt and equity markets down with it.

From mid-September to the end of 2008, he deployed around $75 million a day… gobbling up the best assets for pennies on the dollar. By New Year’s Day 2009, he had invested more than 70% of his $10 billion fund.

Marks made a killing. By 2012, he returned the full principal and promised returns to his investors. After fees, Marks’ distressed-debt funds have returned 16% per year on average over the past 30 years.

Marks attributes much of his success to what he calls “second level” thinking. As he points out to his clients, this means: in order to outperform the market, you must behave, react, and think better than others.

Today, I’ll discuss how to harness this thinking… and how, like Marks, we can make big profits by buying the debt of companies that most stock investors have left for dead.

Let me explain…

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Most people are first-level thinkers. They behave in typical ways, so their investment performance is average.

Marks points out that first-level thinking is simplistic and superficial, and just about everyone can do it: “All the first-level thinker needs is an opinion about the future, as in, ‘The outlook for the company is favorable, meaning the stock will go up.'”

In contrast, second-level thinking, Marks warns, is deep, complex, and convoluted…

“What is the range of likely future outcomes?”… “Which outcome do I think will occur?”… “What’s the probability I’m right?”… “What does the consensus think?”… “How does my expectation differ from the consensus?”… These are the kinds of questions the second-level thinker asks.

The bottom line is that first-level thinkers see what’s on the surface, react to it simplistically, and buy or sell on the basis of their reactions. Second-level thinkers double-think (and triple-think) every angle of every situation.

It’s human nature to “go with your gut”… But as Marks has shown over his career, you always need to second-guess yourself.

Let me give you two examples from our corporate bond newsletter, Stansberry’s Credit Opportunities.

In one case, we had a chance to invest in a company we loved. The other company had lousy prospects (and still does).

Both had bonds trading at substantial discounts to par value. This just means that they traded well below the $1,000 “face value” typical of bonds. We look for these opportunities because no matter how much you pay for the bond at the outset, the company is still obligated to pay you the full $1,000 when it matures… as well as interest along the way.

You might think we decided to buy the bond from the company we loved… and ignore the company we hated. But as Marks knows, second-level thinking reveals that loving a company is not the same as loving its bond.

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At the time of our analysis, the company we loved generated about $25 billion in annual sales. It had huge profit margins. And while its sales were slowing, it was still projected to grow around 4% that year.

Meanwhile, its balance sheet was a fortress. It had $45 billion in assets, including $7.6 billion in cash on hand. With a total of only $7.5 billion in debt, the company could’ve cut a check the next day to pay off all its debt.

That seemed to make its bonds virtually a no-risk proposition.

Our proprietary Stansberry credit-rating system gave the bond we investigated a super-safe “9” (one notch below our highest rating). Credit-ratings agency Standard & Poor’s rated it as an “A,” and credit-ratings agency Moody’s rated it as “A1” – solidly investment-grade.

The bond was trading with a yield to maturity (“YTM”) of around 6%. Bonds with similar ratings typically were yielding less than 2%.

A super-safe bond yielding an extra 4% looked like a real coup. We loved the company, and its bond looked great… Recommending it would’ve been the easy choice.

But our second-level thinking moved us to the sidelines…

The company had just been taken over. Its new parent company raised $50 billion in additional debt to fund the deal. And importantly, all of it would end up having priority in the capital structure over the bond we were investigating.

In short, if something were to go wrong and the company’s loans defaulted, bondholders in the new entity would have been standing in the front of the line to get their principal paid first. Meanwhile, existing bondholders – which would’ve included us – would have been left with little or no recovery.

Using only first-level thinking, we loved the bond. Its YTM was three times greater than the other companies with a similar safety rating. But our second-level thinking told us the bond carried more risk than appeared on the surface. So we stepped aside.

It can work in the opposite way, too…

For example, Marks-style second-level thinking uncovered a great opportunity this past June. It was a bond of a lousy company – a large department-store retailer with shrinking sales…

I’m talking about JC Penney (JCP).

Our first-level thinking – or “gut” – told us to stay away. The retailer had already been through several failed “turnarounds” to save its dying business. Meanwhile, the company was saddled with $4 billion of debt. Investors were convinced JC Penney was headed for bankruptcy. That’s why its bonds were trading at big discounts to par value.

Our first-level thinking wasn’t wrong. The retailer’s business can’t be saved. We can’t envision a scenario where it doesn’t eventually go belly-up.

But our second-level thinking told us JC Penney had at least a few years left before it would file for bankruptcy…

Despite its problems, JC Penney could easily pay all of its interest. And it had no significant debt maturing over the next three years. On top of that, it could borrow another $1.4 billion from its banks if needed.

We saw that one of the company’s bonds – a small $100 million bond due in less than a year – was yielding 30% at the time. It was yielding more than JC Penney’s $500 million bond due in 2097.

That’s not a typo… A small bond due next year was yielding more than a large bond due in 78 years! That made no sense.

So we recommended the bond due next year to our subscribers. We were confident the company could pay us on time and in full next year. And as bondholders, that’s all we care about.

The bond market finally came to its senses a few months later. After JC Penney reported improved quarterly numbers, the bond we recommended began trading much higher. We sold it early near par value and pocketed a 54% annualized return last month.

In short, first-level thinking led us to a bond that yielded less than 6% and was much riskier than it appeared. Second-level thinking led us to a safe bond that returned nine times as much instead.

It’s this second-level thinking that drives our results in Stansberry’s Credit Opportunities…

Since launching the newsletter in November 2015, we’ve averaged an annual return of 20% across 22 closed positions. For comparison, you would have earned a return of only 8% investing in the overall “junk” bond market (as measured by the iShares iBoxx High Yield Corporate Bond Fund (HYG)).

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We even beat the return of the stock market while taking on far less risk. An investment in the S&P 500 Index returned about 17% during the same period.

So the next time you’re looking at an investment, we encourage you to follow Marks’ playbook and go beyond first-level thinking. By using second-level thinking, you’ll stay focused on what’s really important… and ask yourself all the questions you need in order to succeed.

The Oil Trade Is Back… Here’s the Best Way to Play It

By Jeff Clark – the editor of the Delta Report Newsletter

Lots of folks are talking about oil this week.

The Organization of the Petroleum Exporting Countries (OPEC) met in Vienna yesterday to discuss possibly cutting production in order to help boost the price of oil. Representatives of OPEC and non-OPEC countries will meet today to come to some sort of agreement.

FULL DETAILS HERE

There’s lots of speculation OPEC members could agree to cut production anywhere from 500,000 barrels per day (bpd) to 1.5 million bpd. The price of oil has moved a bit higher this week in anticipation of such a cut.

Here’s an updated chart of West Texas Intermediate Crude (WTIC)…

Oil closed yesterday just about right in the middle of its six-month-long trading range between $51 per barrel and $62 per barrel. Back in early October when we pointed out this pattern, we suggested the best trading plan for oil was to buy it when the price of the gooey black stuff came down to the support line of the pattern, near $51. And then sell oil as it ran up to the resistance line of the pattern near $63.

Buying oil here at $58 is a trade that has just about as much potential reward as it does risk. So, it doesn’t look like a very good trade from a risk/reward perspective.

But, if you bought oil back in October, then you’re sitting on a respectable gain for a couple of months. You might as well hold on and see if oil can rally back up towards its resistance at $63.

Just to be on the safe side, though, it’s a good idea to set a stop at the most recent low from late November, near $55 per barrel.

That way, you’ll be sure to lock in a profit on the trade just in case oil starts heading the other way.

Early Warning Summit 2020 – Get Your Free Access to Louis Navellier’s Portfolio Grader

Will 2020 be the year this nearly 11-year-old bull market finally crashes?

This year has been a wild ride for stocks.

We’ve seen a lot of bad days…

In one trading session alone, the Dow dropped 800 points.

That’s not to mention all the negative news over the past 11 months… everything from the trade war to President Trump’s potential impeachment… and the constant fears of recession.

But despite all the bad news this year… and all the talking heads in the media claiming the bull market is over… this market is on pace to finish one of its best years since the bull market started.

This has led to mass confusion among millions of investors.

We’ve received an incredible amount of letters and emails from readers who are becoming increasingly worried about their retirement accounts.

Will 2020 be the year this nearly 11-year-old bull market finally crashes?
How will an election year, global turmoil and a potential economic slowdown impact your financial future?
Most importantly, what should YOU be doing today to prepare yourself financially for 2020?

Early Warning Summit 2020

We want to directly address these concerns and help you make sense of everything, including where we recommend you should AND shouldn’t be investing your money.

So, we’ve invited two legendary investors – Louis Navellier and Matt McCall – to sit down with you for one night only, and tell you what their new research is saying…

Together these two investing juggernauts have accurately predicted some of the biggest market moves of the past 30-plus years:

The Black Monday crash… the bursting of the dot-com bubble… and the exact start of this historic bull market.

Both Louis and Matt are putting their research and reputations on the line to show you exactly what they say is around the corner and, more importantly, how to prepare.

And to help you get the answers and clarity you deserve, we’ve hired an Emmy-winning journalist to sit down and extract every bit of valuable information from Matt and Louis.

We’ve gone to all these great lengths for one simple reason:

To help you understand exactly where the markets are heading, and the ONE thing we recommend you need to be doing with your money, if you’re going to remain safe and potentially profitable throughout the new year.

I promise, you’ll walk away from this free event more confident on how to move forward with your money and with a strategy in place for the big market moves Louis and Matt see coming in 2020.

I’ve seen the research they both plan to share on Tuesday,December 10 at 7 p.m. (EST).

And I can honestly say nothing could impact your retirement more… and bring more clarity to the way you think about investing moving forward… than what they’re going to reveal during our first-ever Early Warning Summit 2020.

I sincerely hope you carve out a little time to join us on December 10, at 7 p.m. (EST).

I’ll be watching and I urge you to do the same.

Reserve your seat right here.

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The TradeSmith Deadly Decade Live Event

Keith Kaplan, president of TradeSmith is hosting an event on Wednesday, Dec. 11 at 8 p.m. Eastern — the TradeSmith Deadly Decade event.

At this live online event, you’ll meet “Trader X,” the mastermind TradeSmith has been working with in secret for the past two years.

You’ll also find out about the “investing super project” TradeSmith has been working on since January 2018…

As we lift the curtain on this huge new project and the identity of “Trader X” at the same time.

Again, this is going to be a critical 90 minutes. Below, you’ll get a taste of what’s in store.

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How central banks are preparing their next stimulus “trojan horse”: Central Bank Digital Currencies, or CBDCs for short — and the reason why CBDCs will radically transform the global financial landscape (and possibly feed runaway inflation).
Why a toxic cocktail of scenarios will bring about the return of high inflation — and not just 1970s-style inflation, but something even more intense (and potentially far worse).
Does that sound like a lot? It’s only the tip of the iceberg. I need you to spend this 90 minutes with me.

From a financial health standpoint, it could be the most important (and profitable) time investment of the year.

The TradeSmith Deadly Decade Event – Click Here To Watch It LIVE – On Wednesday, Dec. 11 at 8 p.m. Eastern

Jeff Bishop’s Total Alpha Program | Midweek Market Update (12/5/2019)

Congratulations, you’ve almost made it through the trading week…and what a roller coaster ride it’s been! Let’s get you squared away with where things stand after some wild market action with the midweek market update.

The SPY managed to fill the gap today left open from Monday’s massive decline. That comes after a sharp reversal Tuesday that took most of the day to play out.

SPY hourly chart

Earlier this week, I said I expected the market to make its way to the hourly 200-period moving average…which is exactly where it stopped. And I will put my money where my mouth is.

Total Alpha Portfolio midday yesterday.

That’s why I look at the other markets, including Bonds, Gold, and the Dollar, for additional information.

Equity winners – Small caps, energy, utilities, and consumer staples

As I outlined at the beginning of this week, I expected small caps to outperform the broader market. The weekly close above the trading range that bound it all year told me it wants to move higher.

IWM weekly chart

We’re already seeing the IWM outperform the SPY by 0.15% in the last three days. That’s come at the expense of the QQQ, which underperformed by 0.32%.

The real high flyer comes from the least likely of places. Energy stocks (XLE) are down a paltry 0.36% compared to the SPY 1.02%. Much of that comes on the back of rallies in both natural gas and crude oil.

XLE hourly chart

Crude oil itself is up 5.17% this week. However, it finished down 4.75% last week when the SPY gained 0.75%…so it’s really just playing catchup and adding a bit to the top.

Natural gas looks more like an oversold bounce. The commodity fell a whopping 17.09% last week, creating a pop this week of 3.97%. It’s got a very long way to go before it shows any semblance of strength.

Utilities continue to perform well alongside bonds. The cheap yields in treasuries force safety investors to search for return, which often drives them into high dividend stocks.

XLU hourly chart

Those with a little more risk tolerance tend to stick with consumer staples. They may have smaller dividends, but offer more exposure to growth.

XLP hourly chart.

Safety Trade Outperformance

Bond ETFs also performed exceptionally well off the back of equity declines, up 1.2% for the week.

TLT hourly chart

This is a crucial hint. For the majority of the year, bonds and stocks traded together. We only saw them decouple and trade opposite one another this week (historically normal behavior).

Following a close second are the gold ETFs. GLD climbed 1.17% this week so far.

GLD hourly chart

Poor performers – The Dow, transports, and the dollar

The biggest loser this week so far has been the Dow Industrials (DIA). Though a small index, it’s down 1.58% on the week.

DIA hourly chart

The real loser this week has been transports. They’ve been just obliterated. The IYT ETF is down 2.88%, nearly double the Dow’s performance.

IYT hourly chart

This could be a harbinger of doom for any Dow theorists.

The real head-scratcher is the dollar. No matter when you looked, the dollar had been the strongest performing area week after week, month after month. So it’s a bit shocking to see it down 0.68% on the week.

UUP hourly chart

That may not seem like much to you. But it’s almost a third of the monthly range.

Go no-where – Healthcare

Here’s an oddball for you. Healthcare stocks are flat on the week. It’s impressive given all the political drag this sector has.

XLV hourly chart.

Most volatile – The VIX

Last week, the VIX printed prices under $12. That’s extraordinarily cheap…and it indicated complacency among investors. It’s not a surprise that the VIX shot up nearly 41.77% at its peak this week, while still settling up 16.63%.

VIX hourly chart

My analysis – we’re heading lower before we head higher

Let’s look at the facts:

Equities haven’t seen a selloff since…well it’s been a while
Investors didn’t buy enough protection
Stocks rose on little volume
Now, the VIX shoots through the roof, and all the safety trades outperform
But the dollar is noticeably weaker

It’s pretty clear that we’re seeing money move into the safety trades after a monster run. However, even though the volume on the downside was much higher than the upside, it’s still pretty light.

Outside of a news event, we’ll likely float sideways to higher through the end of the week. From there, I expect we’ll see one last push lower before we get our Santa Clause Rally.

How I plan to profit these next two weeks

That’s for me to know and Total Alpha members to find out. There’s plenty of egg nog…so pull up a chair.

Click Here to Join Total Alpha (watch this webinar – BEST OFFER HERE!!!)

Source: TotalAlphaTrading.com | Original Link