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The pain train steamrolled through town again this week, and there was nowhere to hide… no sectors it didn’t hit…
Because the pain train comes for everyone in a bear market — unless you have puts!
We managed to hit the absolute grand slam home run trade of the year — so far! — this week in our Link Trades strategy after Target Corp. (NYSE: TGT) cratered more than 25% on Wednesday… But more on that later…
Back to the pain train… When it’s coming for everyone and everything, you have to find stocks that still have a little meat on the bone.
What I mean by that is take a look at retailers and defensive names like Kraft Heinz Co. (Nasdaq: KHC) and PespsiCo Inc. (Nasdaq: PEP) right now.
These are the names getting hit last because there’s still some meat left on the bone. That’s where people, the bears and the vampires especially, try to hide out until the worst is over. But there’s no easy way out of this…
What you want to see is the stocks that have been getting smoked for a long time and have been in a bear market for a month or so, start to bounce, which is a good sign.
And they are starting to bounce. So trade those names from the long side and don’t try to find protection. Be active, stay solvent and survive this period. That’s the name of the game — survival.
But while everyone is getting smacked around in this tough market, like I mentioned above, we hit on the trade of the year in Link Trades this week…
And by “trade of the year,” I’m talking about an 849%* gain, to be exact…
To be clear so no one gets any delusions of grandeur — we’re realistic about trading and want you to be, too…
So this is what we call an “atypical” result, meaning it’s well above our average gain… which also makes it the clear front-runner for trade of the year at this point.
We want you to have as much information as possible so here are a few facts to consider… From Jan. 13, 2022, through May 20, 2022, we’ve closed 13 trades for an average gain per position of 63.6% — including winners and losers — holding for an average of 33 days. The win rate is 38.46% — which just goes to show that a win rate isn’t everything.
This would make a pro trader’s year at any hedge fund, so I couldn’t be more thrilled that we were able to knock this one out of the park.
Here’s what happened…
We entered our TGT puts on April 11 at $6.09 a contract. And earlier this week, Walmart tipped this hand when reporting poor earnings that also sent it tumbling.
That was the moment I began thinking we could be in for a MONSTER gain in our TGT puts… And boy did they ever explode! Just check out that candle down in the chart below — off a cliff on massive sell volume!
After all was said and done, our $6.09 puts sold for $57.75, an 848% gain — our trade of the year!
We were already up about 100%, and Walmart’s bad earnings only made my thesis in this trade stronger because we don’t normally take pairs trades into earnings.
And if you think about it, if Walmart did poorly, then Target did really bad because it has higher price points — and crap rolls down hill…
Target is a notch above Walmart, which is a notch above Dollar Tree. So as the recession starts rolling, people who used to shop at Target are now shopping at Walmart… whose former shoppers are now at Dollar Tree… and then former Dollar Tree shoppers are hitting the mango tree behind my house for dinner…
I’m kidding of course, but what I’m not kidding about is pairs trading being a super successful way to trade the market — it’s a pro’s strategy and it’s not overly complicated for new traders to learn.
Definitely check out Link Trades for more information!
As always, send any topics you’d like me to cover to jeff@joyofthetrade.com and stay ahead of the markets, especially these choppy ones, by subscribing to our YouTube channel for all the latest.
P.S. Looking for a Few Good Traders for a New Strategy
New Money Crew Head Trader Lance Ippolito and his team have been testing a brand-new trading indicator for the better part of this year…
They’ve code-named this initiative Project X.
But before they roll it out as a full-blown trading strategy, they need to make sure the system is as rock solid as they believe it to be…
So far, the system has signaled winning positions in TSLA, AMD, COIN, UPST and PYPL.
Now Lance wants to take his testing to the next level — and he needs your help!
He’s looking for around 100 traders interested in beta testing this new indicator over the next couple of months.
Of course, Lance doesn’t expect traders to jump in sight unseen, so he put together a small demonstration on how it works…
Click Here to See Lance’s System in Action!
*Past performance is not indicative of any future results. Trade at your own risk. From Feb. 25, 2022, through May 4, 2022, five winning positions were issued while four remain open. The average rate of return was 38.33% over a seven-day hold time.
