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Don’t Fight the Flow: Why Traders Shorten Outlooks in Choppy Markets

by | Sep 9, 2022 | Options

We’re ending the week on a much better note than where we began. 

Markets saw a jump in volatility as we slid into the start of September and Labor Day weekend, flooding the tape with short-term options flow as volatility surged…

Oil prices continued to drop this week, hitting levels we haven’t seen since before the start of fighting in Ukraine…

That short-term dip has the herd on Wall Street hoping we might see the Federal Reserve cool its hawkish trend on interest rates if we see lower-than-expected inflation data in next week’s Consumer Price Index report.

Whether that happens or not remains to be seen… But if I’m being honest, I don’t care!

I don’t concern myself much with comments from the suits at the Fed, or where the markets end up at the closing bell….

What I care about is finding the trades each day with the most potential to make some cash money!

And through all the chop, we keep reeling in fantastic wins for the New Money Crew strategies….

Slow Order Flow, Fast Gains!

All streaks eventually come to an end… And unfortunately, Tuesday’s dead flow doomed the Wiretap Alerts 12-0 record we’d had since the start of August.

But even though we lost 2 of 3 trades, our 69%* winner on Peabody Energy Corp (NYSE: BTU) outpaced our losses on General Motors Co. (NYSE: GM) and PG&E Corp. (NYSE: PCG) — and even better, BTU was last week’s largest position!

That gives Wiretap a 69.6% lifetime win rate and a 15.4% weighted average return across all winners and losers to hang our hat on as we get one week closer to our weekend strategy’s first anniversary!

Not to be outdone, Weekly Blitz Alerts racked up its share of quality wins as well, grabbing three Ws* on Rivian Automotive Inc. (Nasdaq: RIVN), Verizon Communications Inc. (NYSE: VZ) and Goodyear Tire & Rubber Co. (Nasdaq: GT)!

This improves our Blitz track record to 24 wins with just one loser since the start of July, improving our lifetime win rate to 68.8% with an average return of 14.3% since we launched the strategy in February 2020!

As we discussed with Senior Strategist Roger Scott and special guest Markay Latimer in this week’s WealthPress Live Roundtable, one of the ways I hunt for quality trades in choppy markets is by using indicators.

I’ve built loads of them over the years, and by far my favorite has to be my Master Indicator — so much so I’ve built an entire strategy around trading it with Heavyweight Trade Alerts, which just locked in a solid win despite the lack of opportunities we’ve seen in the broader market!

My indicator used volume to spot the bullish trend in uranium company Cameco Corp. (NYSE: CCJ). And it delivered a 42%* gain in just five trading days!

That’s right in line with our five-day average holding period, although the return was above average. Since I started alerting Heavyweight Alerts on May 19, 2022, the service has a win rate of 70% with an average return of 12% as of Friday, Sept. 9.

If that sounds like something you want to find out more about, join me at 10 a.m. EDT Saturday, September 10 for a LIVE Master Indicator open house training session!

Why We Never Stretch Short-Term Options Flow

Even with markets on the rise, institutional options flow has been slow coming. When it did hit, we weren’t seeing anything crazy long…

These highly tuned professionals know how volatile and fast-moving this market is. And that’s why most of what we’re seeing is short-term weekly and front-month expiration options flow hit the tape.

They know not to keep capital tied up in longer-term plays or they’re giving markets more opportunity for the trend to turn against them.

So when we see those weekly options roll in on the wire, it’s important to know these are likely day trades or holding a couple of days at most.

They’re getting in and when they hit those 20%-30% returns… then they’re gone.

And because we’ve taken their lead and followed suit by taking gains off the table in short order, we’re able to better protect profits and keep up with market trends…

The track records you just saw are a testament to how effective that approach can be when volatility ramps up!

Yes, you’re going to sell early sometimes… That Rivian trade we closed went on to make a massive run-up, for example. If any of you held on for the ride, let me know because you need to head to the jewelers to get those diamond hands appraised!

But if you’re trading based on short-term options flow, we can’t allow a fear of missing out push us to hold onto those positions over a longer period. Because odds are good we’ll be left holding the bag more often than not.

Check out the video and let’s look at an example of just how fast this short-term options flow can move with Advanced Micro Devices Inc. (Nasdaq: AMD)

P.S. Senior Strategist Roger Scott just held a live event where he handed out the five secret chart patterns that resulted in 15 straight wins* for his Pattern Trader strategy!

I know, it sounds unbelievable…

With a win rate of 93%, Pattern Trader has an average return of 16% per trade with just a three-day average hold time! And that’s since the strategy’s inception on May 23, 2022, through Sept. 8, 2022.

Roger isn’t joking when he says these five patterns could be life-changing

So forget about fundamentals, ditch the technical analysis and learn exactly what these five patterns are all about.

Watch the Event Here

*Stated results are atypical for given period. Past performance is not indicative of any future results. Trade at your own risk.

WRITTEN BY<br>Lance Ippolito

Lance Ippolito

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