Unwrapping the Market’s Latest Gift
Alex Moschina|August 3, 2024
Whipsaw markets are back.
You’d think the S&P would have soared after it seemed like Jay Powell is possibly maybe potentially becoming bullish on the idea of cutting rates in September…
But as of Friday, the benchmark index was down around 3%.
Tech stocks have been shaken hard.
As we discussed on Wednesday, Microsoft (MSFT) and Alphabet (GOOG) continue to struggle despite beating on earnings. The stocks are down 9% and 10% over the past month, respectively.
Intel (INTC) cratered yesterday after an earnings miss that prompted the company to announce mass layoffs and suspend dividend payouts. Shares of the company are down more than 30% from the start of the week.
With earnings next week coming from some big financial names, oil and gas heavyweights, and – of course – more tech, the excitement is likely to continue.
But it isn’t all bad.
Do most investors hate volatility? Sure.
It can be nerve-racking to watch markets bounce around. Especially if you’re counting on blue chips and index funds to carry you through retirement.
But for a seasoned trader like Shah, volatility is a fine delicacy… like Beluga caviar.
Just a tiny bit can send you to heaven.
Case in point…
Just this week, in Shah’s Alpha Money Flow trading research service, we took profits on the CBOE Volatility Index (VIX) August 21, 2024, 13.50/14.50 call spread he recommended.
When Shah first introduced the trade on June 27, markets were relatively calm.
Remember?
“The bull market’s intact, interest rates are down, inflation is trending in the right direction, and tech still leads the rally,” Shah told subscribers. “But… There are some cracks in the edifice. Nothing major, mind you, but something we can set up for.”
Predicting a sell-off in the not-too-distant future, he recommended a play on the VIX that could generate a quick payout if/when things got messy.
As the chart below shows – and as we all now know – it would only be a matter of weeks before Shah was proven right.
The market craziness culminated in a 105% profit in our Alpha Money Flow portfolio.
And a flood of positive notes from satisfied subscribers…
Not too shabby for a trade that was only open for 35 days.
It just goes to show…
The package isn’t always pretty… but volatility can be a gift.
Alex Moschina
Alex Moschina is the associate publisher of Manward Press. A gifted writer, editor and financial researcher, Alex’s career in publishing began more than a decade ago when he worked at one of the world’s leading providers of academic research and reference materials. Alex first cut his teeth in the realm of investing when he joined the team at White Cap Research in 2010. There he was charged with covering emerging market trends and investment opportunities. A stint as senior managing editor and editorial director at the prestigious Oxford Club followed. A frequent speaker at conferences and events, Alex has led educational workshops across the U.S. and Canada.
