A Market More Skittish Than a Long-Tailed Cat in a Room Full of Rocking Chairs
Everywhere you step, it seems like this market has a possible land mine waiting to trigger…
Land mine No. 1: We already have questions about whether or not a recession has started.
Over last week’s Tuesday and Wednesday period, the Dow dropped more than 830 points (or negative 3.1%), which represented the worst start to a quarter since 2008.
Right now, as you read this, the Federal Reserve Bank of New York places the odds of a recession at 38% in the next 12 months (which is based on the difference in yields of the 3-month and 10-year Treasurys).
Land mine No. 2: If that’s not worrisome enough, you also have the daily ramifications of the ongoing uncertainty surrounding the trade talks between the U.S. and China.
Discussions are occurring between lower-level officials, while the higher-level delegates will meet on October 10 and October 11. In the meantime, import duties on $250 billion worth of Chinese goods are expected to rise from 25% to 30% on October 15.
When it comes to the U.S.-China relationship, Maxim Group’s Nehal Chokshi says, “Elevated tensions are here to stay.”
So that’s two major news items affecting the minute-by-minute movements of the market. As traders, we must ask ourselves this: How do you trade in a market that’s more skittish than a long-tailed cat in a room full of rocking chairs?
The answer: You must be as balanced – and nimble – as ever.
For example, in The War Room, members have been trading in and out of Roku (Nasdaq: ROKU) with a high level of success.
As you know from previous Trade of the Day issues, I’ve been skeptical about the TV platform that streams various movies and TV episodes, live sports, music, and news to 27.1 million active accounts.
Back on March 25, I asked whether “streaming fatigue” could mark the end of Roku’s run. In the Trade of the Day issue I wrote, I brought up the idea that Roku may already be obsolete and that its stock seemed shortable using put options.
Then on September 11, we applied our bias using puts – and we made 50% in four minutes.
All the while, Roku stock has indeed pulled back, as you can see below:
Action Plan: I’m bringing this to your attention today because in the midst of the recent market selling pressure, Roku has been showing signs of bottoming out. If we see a market bounce, the digital media company could be one of the leading names fueling the upside move. In The War Room, members have been quickly trading in and out of Roku calls at various support levels we’ve identified – hitting quick, consistent and nimble winners in the midst of the market volatility. That’s what winning traders do. They trade in a way that makes money – whether they’ve been bullish or bearish on a company before.
If you want to know exactly when to buy and sell Roku – and make these quick-hit winners on a daily basis – you’re invited to join me in The War Room today!
Oh… are you new to trading? Then you can still benefit from The War Room! Just look at what one of our newest members said:
“I am one of the newbies. It’s been a blast – way more profitable than my day job. Thanks War Room team.” – RAS
About Bryan Bottarelli
Bryan graduated with a business degree from the highly rated Indiana University Kelley School of Business, and his first job out of college was trading stock options on the floor of the Chicago Board Options Exchange. He was mentored by some of the country’s top floor traders in the heart of the technology boom from 1999 to 2000, where he learned to identify and implement some of his most powerful trading secrets. Now he shares his secrets with a group of elite traders. We will be republishing some of his highly sought after content from his free e-letter, Trade of the Day.