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| | Use These Winning Tactics to Dominate Confused Markets | | Ryan Fitzwater, Associate Publisher, Monument Traders Alliance |  | Each month, we are giving Trade of the Day readers a special look into the trends we are tracking and trades we are making in The War Room. Last week was a master class in navigating the turbulent market... |
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| | | The War Room community was ready for last week's sell-off.
The Saturday before, we noted that investor risk was at an all-time high and that it could lead to a larger pullback.
Paid members had exclusive access to this research that I am going to share with you for free today.
With this crucial information, we adjusted our trading tactics in The War Room and hit 16 winners last week for a 94% win rate!
Here's the most recent Bank of America survey that told us global fund managers were running record levels of risk... Markets confirmed that as investors shifted their risk appetite immediately after the record high was hit. We weren't caught off guard.
Tuesday morning, stocks nosedived. The Dow went red, and the S&P and Nasdaq were down more than 2% and 5%, respectively. The Nasdaq 100 fell more than 3%, briefly wiping out the tech-heavy index's advances for the year.
But the sell-off was brief. As Bryan noted the next morning in The War Room... | | | Choppy Trade Continues: We had another crazy day yesterday - where we saw tech and high-beta stocks get slammed early on - only to put in massive V-shaped recoveries by the end of the session. And then this morning, we all woke up to premarket futures in the green - only to see them reverse into the red. So the chop continues. | | |
It's important to note that Tuesday's short-lived sell-off turned into a "buy the dip" situation.
In fact, #buythedip trended on Twitter as all three major indexes staged a comeback.
As Yahoo Finance reported, "'Buy the dip' has been an almost foolproof strategy that's given succor to hedge funds and retail traders alike as U.S. stocks powered through a series of stumbles on their way to a 75% rally since March."
This ties directly into our "stockflation" thesis we've been researching day and night.
The pullback was quickly extinguished when the Fed promised to continue dumping money into the markets. Just look at the timing of Fed Chair Jerome Powell's testimony on Tuesday morning that quantitative easing would "continue for some time." As you can see, following Powell's statement, stocks immediately reversed their downward trend.
Yet markets are experiencing turbulence - we saw another sell-off Thursday - as fiscal and monetary stimulus clash with another powerful market force...
Will Markets "Yield" the Bull Run?
When futures were as confused as a chameleon in a Skittles bag Wednesday morning, Karim posed an important question to The War Room, "Anyone know why the market flipped from positive premarket to negative?"
Most members hit the nail on the head... rising treasury yields!
If you want to get a full schooling on the subject, Karim's Trade of the Day article from last month is a must-read.
The most important thing he notes, "When the 10-year yield starts to rise, as it has over the past few days, the market historically heads south. Now, it's not all bad because the 10-year and other bonds are going to yield more only if the economy is growing. So there is something to temper any move in the market."
The Professor knows his stuff. Stock rallies generally pause or reverse during periods of rising Treasury yields.
But as you can see, these pauses or pullbacks are also generally short-lived. Sound familiar? Surging bond yields help create the stair-step patterns we see in long-term rising markets. You can see that pattern clearly above.
And in The War Room, we are aware of the short-term impact that can have on markets. So far this year, they have changed market dynamics.
Growth Versus Value, Tech Versus Energy: The 2021 Shift?
Bryan noted the shift to War Room members last week... | | | For years, growth stocks have outperformed value stocks. And for years, technology stocks have outperformed energy stocks. But thus far in 2021, those ratios have flipped. Just this week, the tech-heavy Nasdaq is down nearly 5% - as worries over the 10-year Treasury yield (which is basically the interest rate that the U.S. government pays to borrow money) has risen to its highest level since February 2020. Is this just a temporary glitch? Or is this a sign of an emerging new trend shift for 2021? That'll be a sector/trading theme that we'll zero in on here in Q1. | | |
As we keep a pulse on this shift, we must track the areas with the frothiest valuations.
One of the ultimate froth gauges is the Buffett Indicator. It measures the ratio of U.S. market capitalization to U.S. GDP. Today it shows extreme valuations for U.S. shares. Couple this with rising yields and you can understand why our sell-off radar is actively pinging.
But an important factor this ratio leaves out is that many U.S.-based multinational firms are growing due to economic expansion outside the U.S. The bearish picture gets a bit softer taking that into consideration.
Yet valuations are still high. But it doesn't scare us like it does most investors - those who only play the long game.
War Room pros know we make money in any market. We do that by identifying trends and changing our trading tactics as things shift.
We have no problem if a stock or asset class massively drops. We can make money on the way down and then position ourselves for all the wonderful "buy the dip" opportunities.
Who's at risk of the biggest moves when rising rates slap the market down again? Consider this price-to-earnings (P/E) overview... No surprise to see the Russell 2000 Index at the top of this list. First, small cap stocks should have higher P/E ratios because smaller companies have the best future growth potential, especially those in tech.
Second, investors in recent weeks have plowed tens of billions of dollars into mutual funds and exchange-traded funds (ETFs), with a nice chunk of that flowing into small cap funds like the iShares Russell 2000 ETF.
Sectors and stocks with the most froth will see the biggest downward swings when markets pull back. | | | Karim's Big Loss Warning: If the Nasdaq is down 2%, and you are down 5% on your tech/risky holdings, you are not well-balanced. With balance and hedges, your portfolio should be much closer to the overall market move depending on your holdings and how you are hedged. Hedging will not protect you from any downside, but it should mitigate some of it. | | |
Higher valuations are not a death sentence, but simply an asset allocation warning. In previous economic expansions, small caps haven't outperformed as they usually do. They still have ground to make up.
So for quality small cap tech stocks (ones we frequently trade in The War Room), make sure you aren't overweight and consider them in the "buy the dip" category.
Market chop remains in play. Directional confusion should persist as rising yields clash with stimulus round three, vaccine rollouts and reopening hopes.
In The War Room, we'll continue to balance the ledger and deploy the best strategies to win in rocky markets.
Action Plan: We've been wearing our oven mitts in The War Room, making sure we don't get burned by overheating markets. But being cautious does not mean that you stop ringing the register. We've hit 111 winners this year for an 85% win rate! If you want to start dominating confused market alongside us, join us by clicking here.
Yours in smart speculation, |  | Ryan Fitzwater, Associate Publisher
Monument Traders Alliance
P.S. We hit 52 winners last month (2.74 wins a day) for a 79% success rate. Just check out what War Room members had to say...
Rod W. 2/18/2021 at 9:54:00 a.m.
Thank you Bryan. Bought QS-65 this morning at 935. Sold at 950 for 50% profit. Between yesterday and today, QS has paid for the service which I purchased over the weekend. Now that is my idea of ROI
Dennis E. 2/16/2021 at 11:09:38 a.m.
Hey Bryan. Just made 60% on SAVA.
Jay F. 2/18/2021 at 9:47:52 a.m.
In @7.90 In the 1st. BB's Trade and Hold It... Out @15.2 92% Profit!!! Great Win BB Awesome!!!
Paul P. 2/19/2021 at 9:46:42 a.m.
Good morning WR. I'm a new member and happy to report a nice 35% overnight win on TIGR. Thanks Bryan!
JoAnn B. 2/8/2021 at 9:58:31 a.m.
in at 4.50, out at 5.30 for almost 18% return. Not bad for 15 minutes worth of work. Thx BB.
Johnny M. 2/9/2021 at 9:42:05 a.m.
I just sold the Mar 10 calls for approx. 70% profit. Thanks Karim!
Dave A. 2/9/2021 at 1:37:37 p.m.
Bought the VFF 19 Mar 15C based on KR's 2-2 message, in @ 1.8 out @ 4.15, 130% profit, Thanks Karim.
Joseph A. 2/10/2021 at 11:02:26 a.m.
Keep it up Bryan, last week I pocketed $10,000 on AAPL.
Kuo 2/11/2021 at 9:29:39 a.m.
Thanks KR. Currently still in the 2022 Jan 5C and up 300+%. Have been witling away at my cost basis by selling near month OTM calls against my position.
Jerry 2/9/2021 at 3:57:22 p.m.
So yesterday my account rose 34%. Today was 14%. With the help of BB and KM and the War Room family, my account went from $80k to $220k in two short months. I love this place. Great suggestions. Good advice. Thanks to all in the room.
Ready to get into the game? Join us here! | | | | Recent War Room Winners |
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| DKNG | | 3/1/2021 | | 25.58% | | QID | | 2/26/2021 | | 37.50% | | MAXR | | 2/26/2021 | | 30.77% | | MRNA | | 2/25/2021 | | 113.56% | | GMBL | | 2/25/2021 | | 23.91% | | Biggest War Room Winners | | BG | | 5/26/2020 | | 320.00% | | DIS | | 10/13/2020 | | 198.81% | | FDX | | 9/18/2019 | | 188.49% | | NUGT | | 8/17/2020 | | 179.31% | | FSLR | | 10/28/2020 | | 160.15% | | Fastest War Room Winners | | LMND | | (4 minutes)
12/7/2020 | | 36.67% | | ROKU | | (4 minutes)
9/10/2019 | | 53.62% | | MCD | | (5 minutes)
1/8/2020 | | 24.39% | | OKTA | | (5 minutes)
1/6/2020 | | 27.50% | | RGR | | (8 minutes)
1/6/2021 | | 73.33% | | WMT | | (Fastest double)
1 hour, 20 minutes 7/7/2020 | | 121.12% |
| | | | WAR Room Testimonials | | | |  | KenWin March, 1 2021, 9:53 a.m.
In DKNG at $4.4 out at $5.64 for a quick 28% gain in less than 30 mins! Great start for March! Thanks BB. | | | |
| | | |  | Bruce E. March 1, 2021, 12:16 p.m.
Sold my RKT today for a 138% gain, thx. | | | |
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