Happy Tuesday, traders…
Jeff here.
You’ve probably noticed that stocks are swinging all over the place right now…
For example, at the beginning of last week, the market was looking bearish, making lower highs every day.
Then, just when the charts started to look really bad, Tesla Inc. (NASDAQ: TSLA) surprised with a better-than-expected earnings report, giving the major indexes a big boost.
But that sense of relief didn’t last long. By Friday, volatility was back in full swing as the S&P 500 was down more than 1% intraday.
This is what I like to call a chopfest…
The market is gyrating, consolidating, and chopping around. This makes it tough to hold trades for more than a day or two as prices are changing so quickly.
But if you step back and look at the big picture, it’s clear why the market is choppy right now…
Earnings season + election anxiety = market uncertainty. (There’s nothing the market hates more than the collective “not knowing…”)
And when the tape is this indecisive, it’s tough to have faith that any individual chart’s trendline will hold. You might second-guess entries and exits you wouldn’t have a month ago.
That said, if you know how to approach a choppy market environment, this wild unpredictability can actually work to your advantage.
Don’t believe me? Last week, while other traders were scrambling, I alerted a trade that could’ve 4x’d your bet overnight…*
With that in mind, let me show you how to keep your account safe — and maximize your opportunities to profit — in this ultra-choppy market environment…
3 Factors That Are Chopping the Market Up
The market’s current choppiness is due to a few external factors:
Election Uncertainty
The biggest issue right now is the uncertainty surrounding the November 5 election. People are anxious, unsure of what the results will mean for their trades and investments. And when investors get nervous, the market tends to wobble and becomes more unpredictable.
Earnings Season Volatility
We’re also in the middle of earnings season, which always stirs up volatility. The market can react dramatically based on whether big companies hit or miss their earnings expectations. Every report adds to the market’s choppiness, causing significant swings in both directions.
Oil Price Shock
Last, but not least, we can’t ignore what’s going on with oil in this tape. Just yesterday, oil prices collapsed after Israel didn’t carry out the major attack on Iran that many had anticipated. Traders were prepared for a bigger confrontation, so when it didn’t happen, oil prices tanked. While the immediate threat faded, it’s unclear whether tensions will rise again. It’s a developing situation. Keep your eyes on oil.
The Perfect Strategy for a Choppy Market
With this much uncertainty out there, swing trading is nearly impossible.
The market is moving too fast, making it hard to stay in a trade without getting blindsided by some unexpected news.
That’s why I’ve been relying on quick, overnight Burn Notice trades — and it’s paid off handsomely.
Last week was one of the best weeks I’ve had all year…
On October 24, I alerted T-Mobile 11/01/24 $230 Puts.
Here’s why…
TMUS soared after earnings, climbing over 5% and extending its rally for two consecutive days, reaching all-time highs at a historically stretched level, 13.4% above the 50-day moving average.
With the good earnings already priced in and the chart at all-time highs, I expected a sell-the-news event that would retest the $230 level…
Sure enough, TMUS tanked more than 3% on October 25 (its worst red day in over a month)…
Meanwhile, my puts exploded overnight, opening at $1.00 and trading as high as $4.80 on the day.
That’s a potential gain of 379% overnight.*
Burn Notices are crushing it right now because they focus on quick reversals.
Earnings season and pre-election jitters are making these quick reversals a regular occurrence.
And if you know how to position yourself, you can catch these moves and make some serious profits.
Instead of trying to hold a position for days, hoping the market doesn’t flip on you — you can get in and out quickly, taking advantage of the overnight action.
Don’t try to predict where the market will be in a week or a month. Focus on the here and now.
As we move deeper into earnings season (and get closer to the election), I expect even more Burn Notice opportunities to arise.
The market is going to keep chopping around, and the key to success is being ready to take advantage of these fast, big moves.
Focus on individual stocks with big price swings, especially near the close of the trading day, so you’re prepared to catch those overnight reversals.
This market may be unpredictable, but that doesn’t mean you can’t make money.
Quite the opposite, in fact…
If you know how to play it right, this volatility can be a Burn Notice trader’s best friend.
Happy trading,
Jeff Zananiri
P.S. Speaking of Burn Notices…
TODAY, October 29 at 1 p.m. EST, I’m hosting an URGENT LIVE WORKSHOP where I’ll be breaking down the biggest Burn Notice trade opportunities of the week.
Stop missing huge overnight gains — Click here now to sign up.
*Past performance does not indicate future results
