Happy Tuesday, traders…
Jeff here.
The Trump Trade is firing on all cylinders. The market has been absolutely roaring since his win last Tuesday.
And these crazy price swings are causing some serious FOMO.
If I had a dollar for everyone who’s asked me “Is it too late to get in?” — I’d be even richer than I already am.
But before you go chasing high-flying charts, let me give you some pro tips that can make or break your week ahead…
Don’t panic. You didn’t miss the entire move, but you did miss the first leg. And if you jump into long positions now, you’re chasing a train that’s already halfway out of the station.
It’s a classic way traders get burned, and why you must avoid chasing this week.
I’m talking about taking smart entry points, disciplined exits, and removing emotions. I want you to know exactly where to place your bets (and which setups are “no-trades”).
That said, this price action is exciting to see. The next four years will be ripe with trading opportunities. It’s time to make some serious money.
In that spirit, I’m considering a few specific trades this week. Today, we’ll go through each one step by step…
Crypto Goes Crazy
The big story on Monday was crypto. Bitcoin (BTC) gapped up huge, hitting a new all-time high of $86,000.
Meanwhile, we saw a veritable “crypto rush” into stocks like Coinbase Global Inc. (NYSE: COIN), Marathon Digital Holdings Inc. (NASDAQ: MARA), and Riot Platforms Inc. (NASDAQ: RIOT). They were all up double-digits yesterday.
Don’t say I didn’t warn you that this move was bound to happen…
This is precisely what I predicted two weeks ago on Schwab TV. And again last week.
Had you followed my advice, you could’ve made a small fortune in just a few days…
One of my students, Ryan, bought COIN 11/15/24 $300 calls last Thursday and woke up to 635% gains yesterday morning.
But for those who missed the weekend crypto gap, don’t chase this upside.
Being patient here can potentially save you a ton of stress and a lot of money.
The Russell 2000’s Catch-Up Game
Next, I want to talk about an index that’s finally making some moves, and I mean big moves — the iShares Russell 2000 ETF (NYSEARCA: IWM).
This ETF of smaller U.S. companies has lagged the NASDAQ for years, but now it’s playing catch-up in a big way.
Trump is almost certain to help small businesses, so I think you have to be a bull on IWM for the foreseeable future.
With that in mind, I’m eyeing a Money Link trade where I would long the Russell 2000 and short the NASDAQ.
Why? The Russell is still in catch-up mode, while the NASDAQ has been dominating for years.
But with Trump set to shake things up — with a big emphasis on small businesses — I think this pair is bound to revert closer to one another.
When you pair them, you’re essentially betting on the Russell closing that gap (and the NASDAQ cooling off slightly).
It’s a balanced approach, and if things play out as I suspect, there’s profit potential here that could carry us through the remainder of 2024.
A Word of Caution on Options
Just last week, I wrote about the current High IV Dilemma for options traders.
Even before this crazy post-election rally, implied volatility was higher than historical averages.
But now that underlying stocks are seeing huge moves across the board, their call options are getting even more expensive.
Options pricing works on supply and demand. When everyone’s rushing in, the prices go up fast.
Meanwhile, high IV exacerbates this even further, skewing the risk/reward on calls.
Bottom Line: Don’t blindly buy call options when they’re being chased and squeezed to their limits.
If you’re already in the trade, fine. But for those looking to get in now, be very careful.
I get that it’s tempting to jump in, especially when you see others cashing in…
But remember Isaac Newton’s third law of motion: What goes up, must come down.
There’s always going to be a breather, a pullback, an opportunity to enter at a lower price. After every big price spike, there’s a moment when things start to cool off — and that’s the best time to strike.
When people start saying, “The move is over!” — but you see the chart holding a key price level — that’s usually a prime time to look for an entry.
So if you’re eager to get in, keep a close watch. Don’t chase. Timing is everything — getting in at the right moment can make all the difference in how much you make (or save) on these trades.
Look, I know the feeling of wanting to get in when the market’s moving fast.
I’ve been trading for 25 years, and I’ve seen countless traders make the same mistake: they chase, get burned, and then wonder what went wrong.
Right now, you have a critical choice to make…
You can chase the hype long and hope it keeps going up, or you can take a step back, wait for the right moment, and let the trade come to you.
You know the right decision…
Happy trading,
Jeff Zananiri
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