Note: If you buy the right crypto coins, you could end up with a six-figure nest egg by year-end…
That’s according to our colleague Jeff Brown, an expert tech investor. He says that Trump’s inauguration could lead to a surge in the cryptocurrency space. And a small set of coins could reap the benefits…
He’s hosting a special strategy session tomorrow night to help you prepare. To join his event, be sure to add your name to his guest list with one click…
Investors were feeling euphoric heading into December last year.
Voters had chosen a new pro-business (and pro-crypto) president. And prospective tax cuts were on the table.
Plus, the Federal Reserve looked on target for four interest rate cuts in 2025.
But as we rolled into 2025, some heat started to leave the market.
Investors are increasingly uncertain how Trump’s proposed tariffs will impact inflation and the economy.
And the Fed walked back the number of expected rate cuts, a key driver of the market’s bull run.
The four rate cuts were cut to two – and the market has now whittled that back to just one (likely in October).
Many of the factors underpinning the rally are evaporating. And that’s before you consider the negative implications of a global trade war.
Increasing uncertainty saw the Nasdaq and S&P 500 roll over and fall.
But choppiness is good news for traders. We delivered some quick profits to members of my introductory trading advisory, One Ticker Trader.
We did two trades last week on the Invesco QQQ Trust Series 1 (QQQ). One generated a blended 56.7% gain in two days. The other… a 19% gain inside a day.
So let’s dive into how we did it…
Fewer Rate Cuts Ahead
QQQ rallied after Trump’s election win on November 5 through December. It was the most recent leg in a rally that dates back to October 2023.
Then things changed. The Relative Strength Index (RSI) was flatlining in overbought territory (upper gray dashed line) while QQQ was making its higher highs. After peaking on December 16, QQQ soon reversed.
That down move accelerated on December 18 when the Fed announced its interest rate decision.
Despite cutting rates by 0.25%, Chair Powell pivoted the Fed’s stance from four cuts in 2025 to likely just two…
Invesco QQQ Trust Series 1 (QQQ)
Source: e-Signal
QQQ tried to rebound on December 20. But that up move fizzled out, and QQQ made a lower high and fell.
Then QQQ tried to rebound yet again.
But the RSI made an inverse ‘V’ and reversed (brown circle). This coincided with QQQ making another lower high.
A succession of lower highs and lows like this is typically a bearish pattern. So we decided to take advantage of the move.
I recommended a put option to my subscribers. A put option increases when the value of the underlying stock falls.
As you can see, our entry coincided with QQQ’s reversal.
We closed out the first half of our position just two days later for a 52.5% gain. We wanted to lock in some profits while still giving the trade room to make more money.
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And that proved to be the right call…
We closed out the remainder of that position later that day for a 60.9% gain. Altogether, that handed us a blended 56.7% profit.
However, we didn’t stop there…
When the market opened on January 10, QQQ steadily fell from its opening high. But this time, that down move looked overdone. QQQ was approaching price support around the $500 level.
So we opened a call option position to capture a bounce. A call option increases in value when the underlying stock rallies.
And this trade paid off quickly as QQQ recovered. We closed out our trade later that same day for a 19% gain.
That’s why options are one of my favorite ways to catch quick reversals, and they can be a great way to spruce up your returns.
And in One Ticker Trader, we’ll aim to continue capturing outsized gains like these in 2025.
If you’d like to learn more about how to join us, simply check out the details here.
Regards,
Larry Benedict
Editor, Trading With Larry Benedict