How to Turn Market Turmoil Into Profit Opportunities
Problems come up all the time in life.
At work, at home, in our relationships. And especially in the markets.
So the question isn’t “how do we avoid problems?”
It’s “how do we react to them?”
Simple to answer, but tricky to execute: Treat them as opportunities.
That was the takeaway from a recent leadership webinar our team is doing at Banyan Hill.
The gist of it had to do with problem solving. It was about how the best way to solve problems isn’t by avoiding them or charging in without the right information. Instead, you should ask questions to identify the root of the problem, and then act with quick confidence.
Monday was a problem in the markets. The Dow Jones Industrial Average dropped over 700 points, the most in nearly 10 months.
It’s frustrating to sit back as volatility impacts your open bullish trades. It casts doubt on your reasons for being in them.
Worse, these rapid moves in the market almost freeze you. Making new trades with such uncertainty is hard. It’s tempting to sit on your hands and wait for it to blow over.
But, what’s even harder for some traders is taking the problem and turning it into a day of opportunity.
It requires quick thinking. Guts to jump in when everyone else believes you should be panicking. And the right market data to know how to profit…
Often this third factor can lend a hand to the first two… Spotting the right information can help you overcome your fear and grab ahold of the opportunity.
And that’s exactly what I did this week.
Today I want to show you how I navigated Monday’s turmoil for my readers, turning it into opportunity. And how, with the right information, you’ll be able to do the same whenever the market acts up again.
This all leads into my latest Quick Takes video, where I’ll give my thoughts on a bunch of the trade ideas you sent in this past week.
But first, we have to talk about Monday.
If You Want to Make an Omelet…
There’s no denying it — my readers had to take a couple losses on our open trades on Monday.
We sold out of the iShares Core S&P Mid-Cap ETF (NYSE: IJH) call option for a 57% loss and closed our calls on KBR, Inc. (NYSE: KBR) for a 28% loss. It was important to preserve capital just in case things continued to work against us.
But, in order to turn the market drop into an opportunity, we also jumped into calls that same day.
That’s right. In the face of the worst drop since October, we had the guts to buy calls.
And it’s already starting to pay off with overnight double- and triple-digit gains.
I bring this up before I share my latest Quick Takes video with you because it takes more than a gut reaction to profit in the market. You have to have the right data.
Guts + data = quick, profitable decision making.
And with my Bank It or Tank It analysis, you’ll have all the data you need.
Key levels to watch, any technical patterns forming, along with my take on where these stocks are heading.
This is the kind of data that would allow you to make decisions on the fly and take advantage of a wild day like Monday.
Need proof? Just take a look at how the stocks from my last video have done…
Big Wins From Last Month’s Video
Our Bank It or Tank It stocks from last month are on the move…
Moderna (Nasdaq: MRNA) was in a BRB pattern (breakout, retest and breakout again) back in June. Since then, the stock has shot up 50% after I added it to my Bank It list.
Proto Labs (NYSE: PRLB), a Tank It stock, has dropped over 5% in the last month.
The other three from last month haven’t moved quite as much, but are still worth watching.
Rambus (Nasdaq: RMBS) is a Bank It stock holding steady. Lam Research (Nasdaq: LRCX) was a Bank It stock but is trending lower.
Wells Fargo (NYSE: WFC) is a Tank It stock and not giving us a reason to change my mind just yet.
But today, I have a whole new gamut of stocks to cover…
Today’s Quick Takes covers Inseego (Nasdaq: INSG), Caterpillar (NYSE: CAT), AllianceBernstein (NYSE: AB) and more.
To get my analysis, just watch the video below.
Since I got a lot of great stocks in the mailbag last week, I’m going to do a special Quick Takes next week with your ideas. I’ll run through them just like the ones today to give you some quick feedback.
Just make sure to keep leaving me comments, letting me know what stocks you want me to take a look at. Even if we’ve looked at them before.
Price action always changes… And with it, so do my Quick Takes. So email the stocks you want me to look at to TrueOptions@BanyanHill.com.
Chad Shoop, CMT
Editor, Quick Hit Profits
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Investing has consumed my life since college. While double majoring in finance and economics at the University of North Carolina at Greensboro, I founded the university’s economics club, joined the finance club and participated in the Chartered Financial Analyst research competition to represent our school.