1 Strategy to Profit Off Panic

Jerome Powell, the chairman of the Federal Reserve, is panicking.

The Fed cut interest rates by half a percentage point last Tuesday. This was a huge move considering its gradual cuts and hikes were just a quarter of a point.

That cut was a critical moment.

The stock market was just 10% off its all-time highs. Stocks were looking to recover after just posting one of the best single-day rallies ever.

But the emergency interest rate cut caused a U-turn for stocks — and huge volatility the rest of the week.

In today’s Bank It or Tank It, I’m sharing my thought process during the current market volatility. And where I see the S&P 500 Index going from here.

It’s important you understand what’s at stake for the broader market — and your portfolio.

Check out my latest video to get my insights on the coronavirus, what oil’s plunge means for you and an update to my outlook for the S&P 500.

Check it out here.

 

I’m not one to call for a recession. But this time feels different.

I know we all want a nice round top like we saw in 2007 and 2008. One that’s easy to predict and trade along the way.

I don’t think we got it this time.

I’m actually rooting for a quick rebound.

But each market top is not the same. We saw a classic euphoric rally, leading to a blow-off top.

The quick crash signified it was a false breakout, and stocks are trending lower.

And now, stocks may be on the cusp of a massive 50% drop as the U.S. economy falls into a recession, due to fears around the coronavirus.

But not all hope is lost.

As I mentioned in the video, we’ll continue to grab profits along the way. In fact, we already did during last week’s volatile market, with 50% gains on two put options and a double-digit gain from adding an inverse exchange-traded fund.

Our game plan going forward is to take profits when they come and cut losses quickly.

One strategy sets us up the best in a volatile market: my Pure Income service.

This is my favorite approach at the moment. And every investor needs to consider this trading strategy in the current market.

My colleague Matt Badiali put together a special presentation walking you through all of the details. You can check it out right here.

Regards,

Chad Shoop, CMT

Editor, Pure Income

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