Why I’m Cautious About The Market Uptrend

The Biden team faced its first economic test in the markets this week when the nominee for Treasury Secretary appeared before Congress. Former Fed Chair Janet Yellen is no stranger to Senate committee meetings. And based on the market’s reaction, her appearance went well.

There were no surprises. Her main talking points seemed to have been leaked to the media ahead of her appearance.

Yellen is pushing the plan for more stimulus, noting, “Economists don’t always agree, but I think there is a consensus now: Without further action, we risk a longer, more painful recession now – and long-term scarring of the economy later.”

This echoes concerns raised by Yellen’s successor at the Federal Reserve. Current Chair Jerome Powell has repeatedly told Congress of the need to help to revive the economy. This indicates there is a consensus that fiscal stimulus will not be inflationary, at least at the current proposed levels.

In some ways, Yellen’s comments indicated there would be some degree of continuity in economic policy. She believes she needs to address a dual mission. “The first is to see Americans through the pandemic. But then there is the longer-term project. We have to rebuild our economy so that it creates more prosperity for more people and ensures that American workers can compete in an increasingly competitive global economy.”

This all seemed to reassure markets and indicates that the current uptrend could continue. But as I said recently, I believe the trend is near its end and am remaining cautious.

How I’m Trading Right Now

With all this being said, one thing I consistently remind my readers is that we can still make profitable trades in any market.

And there’s a major reason why…

Back in 2015, I was awarded the Charles H. Dow Award for my development of a special trading indicator — the same indicator that serves as the foundation of my popular Income Trader system. This award was established in 1994 by the MTA to highlight outstanding research in technical analysis.

Winning the Dow Award is an independent verification of my work. A group of market experts critically reviewed my paper and determined that the strategy I use is an example of one of the best ideas in technical analysis. More importantly, it is a practical and profitable application of the ideas of technical analysis.

Case in point, one of my recent trades is in Analog Devices, Inc. (NASDAQ: ADI). The stock is on an Income Trader Volatility (ITV) “buy” signal.

ITV is important to reducing risk in this market. I’m also watching earnings reports to reduce risk. Avoiding open positions on the day of an earnings announcement limits exposure to potential bad news.

ADI is expected to report earnings on February 19. To avoid holding this trade when earnings are announced, I’m recommending an option that expires one week before then.

Action To Take

My research didn’t stop in 2015 when I won the award for the ITV indicator. I’ve continued looking for profitable applications of technical analysis. More specifically (and in geekier terms), I’ve continued to search for quantifiable trading strategies that benefit from the predictable patterns of traders.

My latest research involves one of the easiest markets for traders to exploit: the marijuana industry…

In fact, I’ve found a tiny San Diego firm that’s set to make an announcement that radically increases your wealth… and saves millions of lives.

How is this possible? In short, this tiny firm holds the patent on a safe, revolutionary new marijuana-based alternative to opioid pain-meds like Oxycodone…

Nothing like it has ever been developed before. It goes far beyond what experts previously knew about marijuana — and it could be the final nail in the coffin for the $26.3 billion opioid pain market.

Go here to check out my special report on this opportunity.