Today could be critical to your financial future. The red flags I’m seeing right now are eerily similar to what I saw before several major corrections. #-ad_banner-#If my hypothesis holds true, then the next few days could mean the difference between earning outsized gains and losing 10%-to-30% in a matter of days. For example, on July 18, 2014, I warned that the Russian market was in trouble. Sanctions were starting to take hold, and its economy was cracking. I predicted we would… Read More

Today could be critical to your financial future. The red flags I’m seeing right now are eerily similar to what I saw before several major corrections. #-ad_banner-#If my hypothesis holds true, then the next few days could mean the difference between earning outsized gains and losing 10%-to-30% in a matter of days. For example, on July 18, 2014, I warned that the Russian market was in trouble. Sanctions were starting to take hold, and its economy was cracking. I predicted we would see “dramatic negative reversals in growth and earnings” of the top holdings in the Market Vectors Russia ETF (NYSE: RSX). This, I reasoned, would cause the fund to correct by at least 10% within three months. Well, over the next 20 days, RSX plunged 9%. Within three months, it was down 15%, and within five months, shares had been cut in half. More recently, on May 27, I warned that Chinese stocks were in a bubble. With a shaky fundamental foundation and ominous technical pattern, I targeted a… Read More

In February, I made the case to readers of my premium options service, Profit Amplifier, that a market correction could happen sometime this year. My analysis was primarily based on slowing economic data, downward revisions in corporate earnings growth and the S&P 500’s high price-to-earnings ratio. If I’m correct, then it means my readers and I have the chance to not only protect ourselves, but even profit handsomely from the fall. And we’ll do it in a very simple, easy-to-understand way: by using put options. #-ad_banner-#Given current market conditions, it’s crucial you understand how… Read More

In February, I made the case to readers of my premium options service, Profit Amplifier, that a market correction could happen sometime this year. My analysis was primarily based on slowing economic data, downward revisions in corporate earnings growth and the S&P 500’s high price-to-earnings ratio. If I’m correct, then it means my readers and I have the chance to not only protect ourselves, but even profit handsomely from the fall. And we’ll do it in a very simple, easy-to-understand way: by using put options. #-ad_banner-#Given current market conditions, it’s crucial you understand how options work. Earlier this month, I introduced you to the basics of call options. Today I’d like to discuss put options, which will be especially important when a market downturn occurs. If you’re completely new to buying put options, that’s okay. They’re one of the most basic and common of all options strategies. Puts 101 Puts are commonly used as a substitution for shorting stock. But with options, we have the opportunity to preserve our trading capital by risking less money upfront, while also amplifying our potential profits. You see,… Read More

Despite the fact that Southwest Airlines’ (NYSE: LUV) fundamental metrics are the strongest they have been in a long time and the shares are dirt cheap, the stock has spent most of 2015 torturing the bulls. While oil prices are still relatively low, their recent jump helped knock the stock 25% off its January highs in less than four months. Then, after a brief bounce, LUV was driven to a new year-to-date low following a slew of negative stories. First, the airline launched a huge, “unexpected” fare sale on June 2. The aggressive sale went… Read More

Despite the fact that Southwest Airlines’ (NYSE: LUV) fundamental metrics are the strongest they have been in a long time and the shares are dirt cheap, the stock has spent most of 2015 torturing the bulls. While oil prices are still relatively low, their recent jump helped knock the stock 25% off its January highs in less than four months. Then, after a brief bounce, LUV was driven to a new year-to-date low following a slew of negative stories. First, the airline launched a huge, “unexpected” fare sale on June 2. The aggressive sale went viral and brought millions of people to the Southwest site to look at tickets. Overwhelmed by traffic, the website crashed. It was not functioning properly for nearly a day and a half, leaving thousands unable to book travel online, and phone lines were busy as well. #-ad_banner-# Southwest extended the sale in the hopes of capturing additional business, but in the end this blunder was a huge positive catalyst that got shot down. More selling hit airlines when American Airlines (NASDAQ: AAL) lowered its second-quarter outlook this week. Meanwhile, Southwest CEO Gary Kelly… Read More

“Sell in May and go away” is one of those trite pieces of investment advice that traders would be wise to not follow blindly. This year, the Dow and S&P 500 finished up 1% in May, and the Nasdaq rose nearly 3%. That being said, I did warn my Profit Amplifier readers of one thing they definitely should sell in May. It wasn’t a stock, but a country that is struggling to sustain economic growth — and I saw a chance to make big profits. #-ad_banner-# Weak Economic Foundation Makes This Market Susceptible GDP… Read More

“Sell in May and go away” is one of those trite pieces of investment advice that traders would be wise to not follow blindly. This year, the Dow and S&P 500 finished up 1% in May, and the Nasdaq rose nearly 3%. That being said, I did warn my Profit Amplifier readers of one thing they definitely should sell in May. It wasn’t a stock, but a country that is struggling to sustain economic growth — and I saw a chance to make big profits. #-ad_banner-# Weak Economic Foundation Makes This Market Susceptible GDP growth in China and Hong Kong has been steadily declining since December 2011. Hong Kong’s growth dropped from 8% in the first quarter of 2012 to 2.1% in the first quarter of 2015. As a quick note, the city of Hong Kong is part of the country of China, reverting to Chinese rule from British rule in 1997. Hong Kong and China’s legal and governmental relationship is complex but they are economically intertwined, with Hong Kong and Shanghai being the financial hubs of the country. The chart below shows the trajectories of year-over-year GDP growth for China, Hong Kong and… Read More

Over the past few decades, we’ve seen many advances in how the stock market functions. Today, exchanges and brokerage houses exist almost entirely online, and everyone is competing for microseconds of speed. We’ve also seen the idea of “investing” evolve into something much more advanced and complicated than it was in the early days. I’ve spent my entire 18-year career immersed in the finance world. And in my experience, no matter what data, methods, techniques, witchcraft, mojo or voodoo you choose to use for your investments, it is absolutely critical that you understand what you’re doing. If not, you’re just… Read More

Over the past few decades, we’ve seen many advances in how the stock market functions. Today, exchanges and brokerage houses exist almost entirely online, and everyone is competing for microseconds of speed. We’ve also seen the idea of “investing” evolve into something much more advanced and complicated than it was in the early days. I’ve spent my entire 18-year career immersed in the finance world. And in my experience, no matter what data, methods, techniques, witchcraft, mojo or voodoo you choose to use for your investments, it is absolutely critical that you understand what you’re doing. If not, you’re just another amateur grasping for success. The truth is, today’s “game” requires an increased arsenal of tactics and methods to prosper. And for the average investor, a powerful options strategy is one tool that should be used. #-ad_banner-# Options can be as simple or as complicated as you want to make them. Just know that when you purchase options as a means to speculate on future stock price movements, you are limiting your downside risk, yet your profit potential can be unlimited. Aside from speculation, investors use options for hedging purposes. It is a way to… Read More

Over the past few decades, we’ve seen many advances in how the stock market functions. Today, exchanges and brokerage houses exist almost entirely online, and everyone is competing for microseconds of speed. We’ve also seen the idea of “investing” evolve into something much more advanced and complicated than it was in the early days. I’ve spent my entire 18-year career immersed in the finance world. And in my experience, no matter what data, methods, techniques, witchcraft, mojo or voodoo you choose to use for your investments, it is absolutely critical that you understand what… Read More

Over the past few decades, we’ve seen many advances in how the stock market functions. Today, exchanges and brokerage houses exist almost entirely online, and everyone is competing for microseconds of speed. We’ve also seen the idea of “investing” evolve into something much more advanced and complicated than it was in the early days. I’ve spent my entire 18-year career immersed in the finance world. And in my experience, no matter what data, methods, techniques, witchcraft, mojo or voodoo you choose to use for your investments, it is absolutely critical that you understand what you’re doing. If not, you’re just another amateur grasping for success. The truth is, today’s “game” requires an increased arsenal of tactics and methods to prosper. And for the average investor, a powerful options strategy is one of those tools that should be used. #-ad_banner-#I realize some of you may have never considered using options in your own portfolio. That’s OK. I want to use today’s essay to explain some of the basics and demystify options so that you can use them to amplify your profit potential and limit the downside. Read More

At the end of February, I made the case for a looming market correction based on slowing economic data, downward revisions in corporate earnings growth and the S&P 500’s high price-to-earnings (P/E) ratio.  Over the following two weeks, the S&P 500 dropped more than 3% before trading back up and hitting new all-time highs. But I don’t think we’re in the clear yet. Here’s why I foresee a market correction in the coming weeks and a potential way to profit. During the first quarter, the companies of the S&P 500 delivered another lackluster performance, with net earnings rising a paltry… Read More

At the end of February, I made the case for a looming market correction based on slowing economic data, downward revisions in corporate earnings growth and the S&P 500’s high price-to-earnings (P/E) ratio.  Over the following two weeks, the S&P 500 dropped more than 3% before trading back up and hitting new all-time highs. But I don’t think we’re in the clear yet. Here’s why I foresee a market correction in the coming weeks and a potential way to profit. During the first quarter, the companies of the S&P 500 delivered another lackluster performance, with net earnings rising a paltry 2.4% year over year while revenue contracted 3.7%. Take out financial stocks and total earnings growth would have actually contracted 1.2% year over year. And it doesn’t look like things are getting better. #-ad_banner-#Second-quarter earnings growth expectations have fallen over the past four months from 1.1% to a loss of 6.4%, according to Zacks estimates. What concerns me even more is that markets have moved higher while earnings growth is basically flat and future earnings estimates are dropping. This has caused the S&P 500’s forward P/E to increase from 17.62 in February to 18.02 today. That’s the highest reading in… Read More

A headline on Yahoo Finance one Friday morning caught my eye: “Could This Be the Beginning of the End of the Social Media Mania?” The article was penned by Scott Fearon, the founder and president of Crown Capital Management hedge fund, and it started like this: “I’m kicking myself for not following my instincts and shorting Yelp (NYSE: YELP) before it announced utterly rancid earnings on Thursday morning.” Shares of YELP plummeted 23% on April 30 after the company missed earnings estimates and showed a slowdown in user growth. For the first quarter, Yelp reported a loss of… Read More

A headline on Yahoo Finance one Friday morning caught my eye: “Could This Be the Beginning of the End of the Social Media Mania?” The article was penned by Scott Fearon, the founder and president of Crown Capital Management hedge fund, and it started like this: “I’m kicking myself for not following my instincts and shorting Yelp (NYSE: YELP) before it announced utterly rancid earnings on Thursday morning.” Shares of YELP plummeted 23% on April 30 after the company missed earnings estimates and showed a slowdown in user growth. For the first quarter, Yelp reported a loss of $0.02 per share, double what analysts had expected. Revenue also fell short. And while the number of monthly active users during the first quarter was up 8% year over year to 143 million, this paled in comparison to the 30% growth seen in the first quarter of 2014. The final nail in the coffin was a lower-than-anticipated revenue forecast for the current quarter. Investors quickly abandoned ship, and traders who did short the shares prior to the announcement made a nice sum for a day’s work. Despite Fearon’s concerns (to put it mildly) about Yelp and other social media companies’… Read More

I love earnings season. The tug-of-war between earnings beats and disappointments can set the stage for some serious profits on option trades.  I’ve used earnings announcements to make 40% in three weeks on Tesla Motors (Nasdaq: TSLA), 65% from Amazon (Nasdaq: AMZN) in 18 days and even 50% in Burlington Stores (NYSE: BURL) in just four days. Just this Wednesday, I told my readers about a limited-time opportunity in Southwest Airlines (NYSE: LUV). Most of you are probably familiar with Southwest, which has built a brand for itself as a low-cost airline. Today, it’s the largest domestic carrier in the… Read More

I love earnings season. The tug-of-war between earnings beats and disappointments can set the stage for some serious profits on option trades.  I’ve used earnings announcements to make 40% in three weeks on Tesla Motors (Nasdaq: TSLA), 65% from Amazon (Nasdaq: AMZN) in 18 days and even 50% in Burlington Stores (NYSE: BURL) in just four days. Just this Wednesday, I told my readers about a limited-time opportunity in Southwest Airlines (NYSE: LUV). Most of you are probably familiar with Southwest, which has built a brand for itself as a low-cost airline. Today, it’s the largest domestic carrier in the United States, based on number of passengers flown. The company was set to report earnings before the open last Thursday, but despite a strong track record of earnings beats, shares were down more than 3.5% for the month.  In fact, over the previous four quarters, the company had beaten expectations by an average of 10%. Better yet, in the week each of these earnings releases was announced, shares rose an average of 8%. We saw the biggest jump in January, with LUV rising 16% the week of fourth-quarter earnings on a surprise boost from lower fuel… Read More

Two of the most important lessons I’ve learned in more than 20 years of professional analysis and trading are:  1. The market nearly always overreacts, and  2. Investors are blind to the writing on the wall when fundamentals turn.  And I’m glad this is the case, because betting against market overreactions is one of the best ways to make money in the market. It’s how I plan to make 67% with today’s trade and how we recently closed a 69% winner in Profitable Trading’s Trade of the Week.  Less than a… Read More

Two of the most important lessons I’ve learned in more than 20 years of professional analysis and trading are:  1. The market nearly always overreacts, and  2. Investors are blind to the writing on the wall when fundamentals turn.  And I’m glad this is the case, because betting against market overreactions is one of the best ways to make money in the market. It’s how I plan to make 67% with today’s trade and how we recently closed a 69% winner in Profitable Trading’s Trade of the Week.  Less than a month ago, I told readers about an opportunity in Valero Energy (NYSE: VLO). Shares were trading at dirt-cheap valuations thanks in part to oil’s sell-off. The market was clearly overreacting by punishing all stocks in the sector, even if they didn’t deserve it.  “The real opportunity lies in the fact that Valero is now buying oil 50% cheaper than last year, but has only had to reduce its selling price by 35%. Incredibly, shares are actually lower than where they were last year, despite the cheaper costs, increased consumption and improved margin.” Shares started moving higher almost immediately after… Read More