Midas Letter

The market has finally woken up to the reality of a COVID-19 second wave. US cases are up more than 15% in the last two weeks with cases rising in 18 states mainly in the South, West and Midwest. Global cases has also risen above 9 million with more than 450,000 fatalities reported.

The main news reported by Apple Inc. (NASDAQ:AAPL) last week was the introduction of new software for their Apple suite of devices at a virtual WWDC2020 press conference. However, some other prudent news in markets is the fact the tech giant also reported the re-closing of a dozen stores in the US across Florida, North Carolina, South Carolina and Arizona because of a recent rise in coronavirus infections. Although the company can still operate online, the closing of stores is an indicator of further downside for brick and mortar retailers across America.

The lockdown has also stunted the buying of physical gold in the form of jewelry, bars and coins. Gold prices however are still close to an eight-year high as investors have fled to a perceived safety during these volatile times.

So, with the somewhat bleak news flow this week, what are the stronger opportunities for traders to the upside?

In this interview Future of Wealth Head Trader Lance Ippolito teaches the following strategies on how he fishes out success in the market:

1… Hedging strategies (longs via call options and shorts via put options)

2… The outperformance of utilities when markets are volatile with high dividend yields.

3… With the Fed being reckless, having to at least consider precious metals in the form of lower priced gold and silver miners.

4… and much more.

Original article: How Traders can Surf the Coronavirus Second Wave©2020 Midas Letter. All Rights Reserved.

FAANG stocks and the largest technology stocks have dominated in a year of uncertainty (to put it lightly). Their consensus P/E ratios are forecast to be the highest in decades.

As the economy has been decimated due to the Coronavirus and company earnings estimates have been hit in correlation, the largest of tech companies have been the investments to make – so far.

With the following news coming out this week, will these tech names be the trades to make this week and beyond?

Tuesday – U.S. Manufacturing PMI: Markets could improve if the PMI expectation of 50.0 materializes.

Thursday – U.S. GDP: Analysts are braced for a sharp drop in Q1 GDP, with an estimate of -5.0%. To reflect the damage to the economy due to the Coronavirus, markets are preparing for a drop in U.S. Q1 GDP of -5.0%. Traders should be very careful if losses are larger than expected.

Also Thursday – U.S. Unemployment Claims: The consensus at this point in the COVID-19 timeline is another drop of 1.3 million.

Lastly, companies like Nike Inc (NYSE:NKE) are reporting earnings this week – which will provide the foundation and set the stage for how we can anticipate future earnings reports.

Watch the full interview to see how the expert roundtable are going to trade the news this week and their opinions on best sectors to trade in the short/long term.

Original article: Tech Stocks: The New Safe Haven?©2020 Midas Letter. All Rights Reserved.

How quick can economies emerge from the Coronavirus and the corresponding lockdowns?

How much impact will tariffs and a potential trade war have on markets?

The uncertainty in markets is at an all time high as no one can reasonably answer these questions and predict the future price action. Not to mention, it is a U.S. election year. Volatility is still 2.5x its norm as demonstrated by the VIX (INDEXCBOE:VIX).  With all of these concerns in markets institutional traders are sitting on the sidelines and markets have adopted a wait-and-see pattern.

Until a vaccine is demonstrated or COVID-19 cases start reliably decreasing globally, markets are unlikely to see a sustained upside period.

To combat this, here are the trade setups Wealthpress Head Trader recommends:

Iron Condor

An options trading strategy created using 4 options contracts (2 calls and 2 puts) at 4 different strike prices. The goal is to profit from low volatility in a stock to earn profit when the price closes between the middle strike prices at expiration.

2. Bear Call Spread

An options strategy created with the sale of a call option and the purchase of a call option in the same stock at a higher strike price. This strategy generates profits when the underlying stock price stays below the strike price. In this scenario, the spread expires worthless, allowing premiums to be collected upfront.

3. Work-from-Home ETF’s

Watch the full interview to see the momentum stocks Roger has profited over 400 points from and strategies he is using during these unprecedented times.

Original article: The Trade Setup to Profit from Market Volatility©2020 Midas Letter. All Rights Reserved.

The S&P 500 Index (INDEXSP:.INX) has turned negative yet again this morning.

New data has come out showing a recent surge in COVID-19 hospitalizations in Texas. This news has caused markets to reverse directions and start heading back into downfall. This comes after three days of rise in the stock market surrounding optimism within the U.S. economy.

Fear of a second wave of the Coronavirus, further escalating tensions with China, uncertainty in company earnings… It’s becoming harder and harder to know where to focus your energy as a trader to profit from swings back-and-forth in today’s stock market conditions.

The market is extremely reactive in both directions. But, especially on the upside, when there’s a sniff of good news to do with the virus…

Future of Wealth Head Trader Lance Ippolito and James West break down how to navigate these unprecedented times while trading options. Watch the full interview where the head trader discussed winners he has on his books, the rise of Robinhood & retail traders and much more.

Original article: How to Trade Options in Today’s Market©2020 Midas Letter. All Rights Reserved.

Before the end of last week, we had been seeing a consistent drift lower in the CBOE Volatility Index (INDEXCBOE:VIX) coupled with a rise in overall markets. As we have been predicting through momentum indications, Thursday changed everything…

We saw a complete reversal and a massive market sell-off. The Vix then closed at its highest level of volatility since April.  The main catalyst being fears of a second wave of the Coronavirus. Markets have also been severely overbought on short-term basis and so it isn’t hard to see the rally would fizzle out.

So what’s next for Wall Street?

Watch the full interview with Wealthpress Head Trader Roger Scott, Joy of the Trade Head Trader Jeff Zananiri and Future of Wealth Head Trader Lance Ippolit where we answer the following questions:

What will happen now the S&P 500 Index (INDEXSP:.INX) has seen a death-cross from a technical analysis perspective?

What are the strategies retail traders should be using/avoiding with the increased volatility in the stock market?

What are the high probability trades we’re looking at to make money as the market correction persists?

Original article: Top Trading Strategies as Markets Decline©2020 Midas Letter. All Rights Reserved.

“History doesn’t repeat itself, but it often rhymes” – Mark Twain.

The Feds objective is market growth demonstrated by a constant uptrend in stock market performance. By printing money, the economy can appear strong but increasingly the economic data does not support the case.

We have seen an increase in the number of Coronavirus cases as many states have relaxed their lockdown measures.

But just like many peoples sentiment about the virus, as people reintegrate back within socially unacceptable distances, traders just don’t care.

Do you believe him?

Since fundamentals are thrown completely out the windows and we now live in a traders market.  There were 3 momentum indications that showed this pullback was coming.

1… Moving Averages (200-Day SMA vs 50-Day SMA)

The percentage of stocks trading above their 50-day moving average was above 90%. Meaning: Short-term momentum in the markets was extremely bullish. Simultaneously however, the percentage of stocks trading above their 200-day moving average was below 50%. Meaning: Long-term momentum in the markets was bearish. With this contrast, momentum does not match with other technicals and represents we were not in a true bull market. This also confirms the large recovery since March was not a new leg up and the second shoe is there to drop.

2… Relative Strength Index (RSI)

Prices within markets have been consistently increasing. However, when looking at how overbought markets have been, it is clear to see that a pull-back could take place. Usually, when the RSI is over 70 and is indicating an overbought or overvalued environment, we may be primed for a corrective pullback. The S&P 500 Index (INDEXSP:.INX) RSI reached 85 before yesterday’s pullback.

3… Put-to-Call Ratio

When the market is buying more puts than calls, it suggests that a bull-market is ahead. The ratio dropped to 0.37. When you look back in history to when we have seen these levels before, its not a massive shock as to what happened next…

Watch the full interview to see the technical indicators Wealthpress Head Trader Roger Scott is looking at to judge the future direction of the stock market.

Original article: Will Stocks Sell-Off Again or is another Boom Incoming?©2020 Midas Letter. All Rights Reserved.

We have seen the S&P 500 Index (INDEXSP:.INX) have the most prolific gain amidst the worst economic data since the Great Depression.

As investors, you may be asking yourself how do we reconcile this?

But unless you plan on taking an ECON exam anytime soon, in today’s traders and momentum market, you may not want to spend all your time and effort answering it.

Instead we are staying solvent and proactive to lock in as many profits as we can during this twilight zone. This while still remaining cautious and hedged with an eye on “if it’s too good to be true, it might just be”.

Watch the full interview to see the formulated trading strategies Wealthpress Head Trader Roger Scott, Joy of the Trade Head Trader Jeff Zananiri and Future of Wealth Head Trader Lance Ippolito will be using this week.

Strategies involving some energy stocks up over 40% with options up over 200%… and how to trade the FOMC Interest Rate decision Wednesday…

Original article: Trading Strategies for “Too Good to be True” Market Conditions©2020 Midas Letter. All Rights Reserved.

The S&P 500 Index (INDEXSP:.INX) has broken above its 200-day moving average. This would normally indicate a bullish sentiment and price action, right?

When digging a little deeper and taking an internal look inside the index, we notice a couple key trends:

1… 97% of stocks within the S&P 500 are trading above their 50-day moving averages;

2… but only 47% of stocks within the S&P 500 are trading above their 200-day moving averages.

There lies the discrepancy. The shorter moving average indicates a monstrous short-term trend to the up side. A huge momentum that can’t sustain itself on its own. Couple that fact with half of those stocks not trading above their 200-day MA, and we see a vulnerability in markets where there lies a high  probability we of dipping back down…

This means: the V-bounce recovery we’ve seen since February could be nothing more than a very large dead-cat bounce (a temporary recovery of prices from a decline that is then followed by the continuation of the downtrend) and markets will revert back down. Perhaps the only reason markets recovered as well as they did is because of the speed in which we dropped in the first place.

With that major theme to keep in mind when entering the market today and in the coming weeks, these are opportunities to make profits. Here is what Wealthpress Head Trader Roger Scott is still looking at:

Weapons & Defence Stocks…

Although, the riots stemming from the murder of George Floyd  hasn’t been reflected in the overall price action in markets, there have been stocks that are on the rise. Gun stocks have jumped after police-brutality protests and looting  plagued the US. Firearm manufacturer Sturm Ruger & Company Inc (NYSE:RGR) is up 65% since March. As governments and police forces are accumulating tasers, developers of such weapon products for law enforcement like Axon Enterprise Inc (NASDAQ:AAXN) are up 80% since March.

Shorting stocks which have seen little-to-no upside amid the last months market rise…

Watch the full interview to learn more about Roger’s shorting strategy and the stocks he is looking at to capitalize on market growth while limiting any downside risk.

Original article: No-one is Talking about this on Wall Street©2020 Midas Letter. All Rights Reserved.

It seems the best investment strategy at the moment is to throw caution to the wind and take a chance.

Experienced traders are entering positions they would never normally pull the trigger on. Perhaps even being acutely aware they are purchasing a “bad” stock (meaning not trading on fundamental news flow or from the usual technical analysis and normal setups), but getting rewarded heavily for doing so.

A stimulus has been given to the average person allowing retail traders to enter the market into any position they like the look of. Buying stocks institutional traders would stay clear of. But the fact remains, these traders are outperforming the hedge funds, fund managers and the “smart” money.

This is a trend that is looking more and more likely to continue.

The institutional buyers are sitting on the sidelines and watching the average investor get rich from 30-40% gains in the shortest amount of time. If they decide enough is enough and consider jumping on the profit train, then June could be an even bigger month than May. If big money starts loading up on these same stocks analysts wouldn’t touch, we could be riding a faster form of transport than a train… all the way to the mooooon.

It may be difficult for our subscribers to think this way. But, what good is it if we follow the most sound fundamental data while not making any money? The key to making money, in any market condition, is to react to (not follow) the price action.

The questions to ask ourselves is this…

Which sector is most consistently providing upside and delivering value day to day?

How can we make the most money in the shortest period of time?

There has been a major bid on growth stocks profiting from the Coronavirus. Stocks that are needed when working from home such as Zoom Video Communications Inc (NASDAQ:ZM), Roku Inc (NASDAQ:ROKU), and Slack Technologies Inc (NYSE:WORK). So far, even with economic reopening, there hasn’t been any indication these stocks are tapering off any time soon.

But we see a real chance to make money from a rotation out of these growth names and into value companies. Stocks such as Bank of America Corp (NYSE: BAC), Pfizer Inc. (NYSE:PFE), Johnson & Johnson (NYSE:JNJ) or AT&T Inc. (NYSE:T). Companies where “smart” and “dumb” money will feel safe to deploy their capital to get away from tech and growth names. The companies where investors who have missed the large 40% run-up from some stocks, can still capitalize on the uptrend in the market. Companies that aren’t close to their 52 week high but are destined to get there.

If you don’t feel like exposing your self to one of these names in particular, there are options to invest in a basket of these value stocks such as the ETF iShares S&P 500 Value Index (NYSEARCA:IVE).

Watch the full interview to see how Future of Wealth Head Trader Lance Ippolito is capitalizing on the price action in today’s market conditions.

Original article: Stocks to Make the Most Money in the Shortest Time©2020 Midas Letter. All Rights Reserved.

We have entered the micro era of black swans. Where the abnormal has become the new normal. Economic and headline news is no longer the main driver of markets.

This is the new world we live in however, the public doesn’t seem to be scared. People are normalizing after their stint in lockdown and have even developed a bit more of a risk appetite in the market.

With the current activity inside markets, our expert affiliates outline a few themes worth considering before you invest your hard-earned capital.

There are rhymes and patterns as to how markets price in news. The shocking racial events plaguing Minneapolis evoking reaction all over the world hasn’t yet seen any price action within stock news. However, as the country is waiting for city centres to reopen after the Coronavirus crisis to help with the economy, events such as these are not market news, until they are… (something to keep in mind)

Markets rallied last Friday as investors were relieved after Donald Trump’s not-so-harsh announcements on the Chinese trade war. However, the anti-Chinese dialogue is likely to remain a major theme to market sentiment moving forward.

So, as those news items unfold we can expect some road bumps in the short-term, even with the smoothness and bounce back of the month of May. Expect different sectors to spike, tech and healthcare to cool off and volatility to increase.

With those expectations and themes, here is what we recommend to do when entering the stock market this month:

Take it day-by-day, don’t use your emotions and ego to look for negativity in the economy and force trades to try to anticipate large price spikes. Also, would you put your money into a mammoth tech stock at its 52 week high or into a Wells Fargo & Co (NYSE:WFC), for example, that hasn’t had a break out move yet?

Put on your fund account manager caps and take a very logical approach to your investing activities.

There are some trading opportunities to take advantage of stocks on the move because of the current circumstances the world find itself in. For example, Logitech International SA (NASDAQ:LOGI) webcams are sold out on every platform you search for. Their stock has seen a continuous rise since mid March – up more than 75%. Stay-at-home stocks and companies thriving in these unprecedented economic climate are worth looking into.

We believe in a general hedging strategy for the short-term. We like to insure ourselves against negative event’s that could impact our investments. When the markets go up, we want to make money on our long plays. When the markets go down, we want to make money on our short plays. Trading put options will allow us to either take increased profits or protects our long investments when the underlying security takes a turn in the other direction.

Watch the full interview with Wealthpress Head Trader Roger Scott, Joy of the Trade Head Trader Jeff Zananiri and Future of Wealth Head Trader Lance Ippolito to learn how they are using these strategies in today’s economic climate.

Original article: Trading Approaches for June in Post-COVID World©2020 Midas Letter. All Rights Reserved.