The Vaccine News Is Great, But I’m Sticking To The Plan…

Most of my readers know that I’m a mom. And I’m betting a lot of you are parents, too, so I think many of you can relate to this idea…

You do everything right. You are tired of hearing the kids singing the ABCs all day, as they wash their hands. You wear a mask and enforce that rule rigorously for your family and everyone they are in contact with. You minimize contact with people.

Yet, someone in the family gets sick.

Maybe someone cheated and pulled their mask down when you were distracted. Maybe one of the children just sang while the water was running and didn’t really wash their hands. Maybe any one of a million things went wrong.

It doesn’t matter. You expected something to go wrong. That’s why I was surprised by the stock market’s reaction to Pfizer’s announcement about its vaccine.

The test went well, and officials said the vaccine is 90% effective. That’s excellent. But even when everyone in the house washes their hands 90% of the time and wears a mask every moment mom is watching doesn’t guarantee we will avoid the virus.

But, again, 90% is pretty good. Assuming everyone gets a vaccination.

Yet, as my colleague John Persinos recently pointed out, more than a third of Americans say they would not be willing to get the vaccine, according to surveys.

In other words, I believe we are still facing challenges, even with a vaccine. That’s why I’m puzzled by the market’s reaction to the news. The Dow Jones Industrial Average gained more than 5% on the news. Traders seem to believe we will be back to normal in the economy soon, and I believe that is overly optimistic.

In the past couple of days, we’re already starting to see some mild correction from the big rally. That’s why I’m remaining conservative.

How I’m Trading Right Now

But there are still plenty of trading opportunities out there. You just have to know where to look.

For example, I recently made a trade recommendation in the semiconductor sector.

The semiconductor industry is one area that has a lot of long-term bullish catalysts. Therefore, it’s a good bet that this sector is fertile ground for traders. (My colleague Jimmy Butts recently wrote about just how far the sector has come – and how developments like 5G will continue propelling well-positioned chip stocks higher. You can read his piece here.)

The trade in question is in NXP Semiconductors N.V. (NASDAQ: NXPI). NXPI trades at about 17 times next year’s expected earnings, a discount to the broad stock market.

This makes NXPI is a value stock in a growth industry. And that’s good news for investors and traders alike.

The company is a leader in secure ultra-wideband (UWB) technology. UWB is an enabling technology for 5G. These are factors that make NXPI attractive for the long run. In the short run, the chart pattern is compelling.

NXPI has been a market leader. My award-winning Income Trader Volatility (ITV) indicator has a “buy” signal on the stock, and there’s significant support near $120, which limits the downside risk in the stock.

Closing Thoughts

I share the exact details of this trade out of fairness to my premium readers. But the point is, while I remain cautious, there are still trading opportunities to be had in this market.

Don’t get me wrong. The vaccine news is good, but don’t get carried away with enthusiasm because of it.

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