Countdown Test

00days 00hours 00minutes 00seconds 2020-12-25 12:00 AM     00days 00hours 00minutes 00seconds 2020-10-25 12:00…

Hello trader,

Well, it’s been a roller coaster ride of a market with twists, turns, and several bumps along the way. Making money in this market environment has been a challenge for many traders… to say the least.

On any given day, a tweet from the President… a headline about political tensions rising… trade war news… or even an announcement from the Federal Reserve Bank… has the power to stop the market on a dime… and reverse its course.

 

Source: Bloomberg

 

Heck, headlines came out this weekend about how Iran completely lied about shooting down the Boeing jetliner… and we could be waking up to a potential gap down come tomorrow morning.

It’s very easy to get caught up in the noise in such a heavy news-driven stock market…

So how can we still prosper and profit in such an unstable environment?

Simple.

Focus on what the charts are saying… and keep a keen eye on the price action.

I know, I know… Jason, The market is near all-time highs… how could you possibly say the market is unstable?

 

Could Index Funds Spark The Next Big Market Crash?

 

Hear me out.

Everyone and their brother are trying to get into the market… and they generally do so through index funds. You’ve probably heard of BlackRock, Vanguard, and State Street before, right?

Well, a lot of investors place their money in the market via passively managed funds, and they pay a small fee to have someone “manage” their money. It’s simple and easy for the everyday investor. However, it doesn’t get you anywhere, especially if you’re paying the volatility tax.

Think about it like this, BlackRock has approximately $7 trillion in assets under management (AUM), while Vanguard comes in at $5.6 trillion and State Street with $2.9 trillion. Combined, these three behemoths control about 80% of all the money in index funds.

Get this, more than 20% of the shares of a typical S&P 500 company is held in their portfolios… and the “Big Three” owns nearly 20% of Apple Inc (AAPL). Heck, they also have some hefty holdings in the world’s largest banks.

When you think about it, the SPDR S&P 500 ETF Trust (SPY) finished 2019 up a whopping 31%… and at some point, you’ve got to wonder when will the profit-taking happen?

Very soon, I think… as we may see some outflows in the index funds after the remarkable year it’s had. If that does happen, there may be a flood of sellers trying to take profits… and I could see panic ensue, and traders potentially dumping a bulk of their holdings.

Right now, the charts are telling me to be careful and brace myself for the next leg down. Just take a look at the daily chart in SPY.

 

 

On Friday, SPY hit the upper Bollinger Band range and pulled back. Typically, when a stock or ETF reaches that level, it’s a sign it could mean revert and fall to a key support level. Not only that but if you look to the RSI, the SPY is very close to overbought levels.

When you take a look at high beta names, such as Apple Inc. (AAPL) and Tesla (TSLA)… it’s the same story.

 

 

 

They’ve both reached extreme levels… and are extremely overbought.

Of course, one of the major smoke signals in this market right now is the political tensions between U.S. and Iran. That could shake things up for the overall market, and overvalued stocks. However, that may all get overshadowed by every trader’s favorite season: earnings season.

 

Earnings Set To Drop, Markets Don’t Care

 

Corporate earnings season is set to kick off this week with JP Morgan Chase (JPM) reporting this Tuesday. Traders will be watching closely as they look for clues as to how the banking industry is faring.

Of course, many have been betting on global growth picking up this year… after the U.S. and China “trade truce”. However, what happens if corporations actually come out and report bad earnings for Q4 2019?

Well, we could be looking at a potential correction.

Of course, I won’t be going out on a limb here and randomly shorting stocks. I’ll be following them closely and waiting for the right time to pounce, and I’ll be waiting until I see the smoke signals pop up.

Author: Jason Bond

Jason taught himself to trade while working as a full-time gym teacher; his trading profits grew eventually allowed him to free himself of over $250,000 in student loans!

Now a multimillionaire and a highly skilled trader and trading coach, Over 30,000 people credit Jason with teaching them how to trade and find profitable trades. Jason specializes in both swing trades and in selling options using spread trades, which balance the risk of selling options. Jason is Co-Founder of RagingBull.com and the RagingBull.com Foundation which donates trading profits to charity. So far the foundation donated over $600,000 to charity.

The curious and enterprising investor can take advantage of a variety of securities to rake in the cash. They can also follow different kinds of investment strategies: While some traders look to make an immediate payoff and maybe even earn their living from trading, others simply want a stable, long-term investment that will help them save for retirement.

Investment grade bonds are one of those securities that make great long-term investments. In contrast to other kinds of traders, such as day traders looking for an immediate payoff, people who invest in bonds are usually looking for a long-term investment option that will yield a steady payoff over time.

How do investment bonds work? In summary, investment bonds are:

  • Debt securities.
  • A type of investment where the bondholder is essentially lending money to the issuer in exchange for interest payments.
  • Looked on favorably by investors desiring a reliable, long-term income stream.

Learn everything you need to know about investment grade bonds to get started investing.

What Are Investment Grade Bonds?

A bond is like an IOU. It’s called a debt security because bonds are issued by borrowers, usually a company or a government, to raise money from investors. In exchange for lending the money for a certain amount of time, the bondholder receives interest payments. The bond’s issuer promises to pay a certain amount in interest over the life of the bond and to repay the principal once it ‘matures,’ or comes due after a pre-agreed period.

Investment grade bonds are one of the most important types of securities for individuals following an income investing philosophy, meaning they’re looking for relatively safe investments that will generate steady income.

A variety of bonds exist, including savings bonds, commercial bonds, and treasury bonds, which we’ll get into more in a minute.

What Are the Benefits of Bonds?

Bonds are common securities, in part because of their many benefits, including:

  • A predictable income stream in the form of interest payments, usually issued twice a year.
  • Earning back the entire principal invested if you hold on to it until it reaches maturity. Thus, bonds can help preserve capital.
  • As part of a broader portfolio, the ability to help offset exposure to more volatile holdings.

There are also several reasons companies, governments, or municipalities might want to issue bonds. By issuing bonds, these entities can receive:

  • Operating cash flow.
  • Financing for their debt.
  • Funding for capital investments.

Types of Bonds

Generally speaking, investors talk about several categories of bonds:

  • Investment grade bonds have a high credit rating, indicating they come with less risk than high-yield bonds.
  • Corporate bonds are debt issued by public and private corporations.
  • High-yield bonds have lower credit ratings, meaning they present more risk for the holder. In exchange, they offer higher interest payments to the bondholder.
  • Municipal bonds are issued by local government entities such as cities, counties, and states. Types of municipal bonds include:
    • General obligation bonds, which are not secured by assets but backed by the "full faith and credit" of the issuer, which can typically raise revenue by taxing residents.
    • Revenue bonds are backed by revenues from a particular source, such as highway project tolls. A nonrecourse revenue bond means the bondholders do not have a claim on the underlying revenue source if the revenue stream declines or ends.
    • Conduit bonds, which governments issue on behalf of private entities with public interests, such as hospitals or universities. The issuer promises to pay the interest and the principal on this type of bond.
  • U.S. Treasuries are bonds the U.S. Department of Treasury issues on behalf of the federal government. They are, therefore, usually considered popular and safe investments. Types of U.S. Treasuries include:
    • Treasury Bills, which are short-term securities that typically mature within a few days to one year.
    • Treasury Notes, which are longer-term and usually mature within 10 years.
    • Treasury Bonds, which are also long-term and mature within 30 years, paying interest every six months.
    • Treasury Inflation-Protected Securities, or TIPS, which are bonds and notes where the principal is adjusted based on changes in the Consumer Price Index. They are issued with maturities ranging from five to 30 years.

What Is the Difference Between Stocks and Bonds?

Stocks and bonds are two of the most common types of securities issued. But what’s the difference between them?

In short, bonds are debt, while stocks provide ownership stakes.

Stocks are essentially pieces of a company — when you buy them, you own a share of the company itself. When an entity issues a bond, it agrees to pay interest and pay back the principal. Bonds do not represent an ownership stake in the issuing entity.

What Are the Risks of Bonds?

So far we’ve discussed the benefits of buying investment bonds, but as with any security, it also comes with risks. The risks associated with bonds include:

  • Credit risk/default risk: The bond issuer could default on the bond by failing to make timely interest or principal payments.
  • Inflation risk: Inflation refers to the overall upward movement of prices, which reduces purchasing power. This is a risk associated with receiving a fixed interest rate. Depending on the rate of inflation, that fixed rate could be worth less down the road than you initially thought.
  • Liquidity risk: This is a risk for investors looking to sell a bond before it reaches maturity. If investors can’t find buyers for the bond, they might be stuck with it when they want to sell.
  • Interest rate risk: Rising interest rates make recently issued bonds more attractive to investors than older bonds because they yield a better fixed interest rate. If interest rates go up, it could be more difficult to sell a bond with a lower interest rate on the market. The seller could be forced to offer the bond at a discount.
  • Call risk: A bond’s issuer might be able to retire the bond before it reaches its maturity date. This is a move issuers are more likely to make when interest rates decline, similar to how homeowners can refinance their mortgages to reap the benefits of lower interest rates. But that’s a risk for the bondholder.

Tips for Investing in Investment Grade Bonds

While bonds can be relatively safe investments, it’s important to do your research and have a strategy before you invest. Start by defining your investment objectives. Are you looking to save enough money to retire comfortably? Are you saving for a major goal such as buying a house or paying for your kids’ college education?

Once you’ve figured out your investment goals, you have a better sense of how to assess your risk profile. If you’re looking for a steady income stream and/or to save for a long-term goal, you’re likely looking for a relatively low-risk investment. Just like stocks or other kinds of securities, different kinds of bonds and bond funds have different risk profiles. Make sure you understand the risks before you invest, and ensure the risks align with your risk profile.

Once you’ve designed your investment strategy based on your goals and risk profile, you still need to do research before you invest. Read books and find information online about how to invest in bonds. Learn from experts, such as our team of RagingBull trainers. Before you buy a bond, learn about the company or entity you’re investing in. Check out the bond’s offering statement, which contains important information such as the bond’s yield and call schedule.

Finally, don’t just reach for the highest yield. Newbie bond investors are often tempted to simply look for the bonds with the highest interest payments, especially when interest rates are otherwise low. However, a high interest rate in these conditions likely means the bond represents a greater risk. Yield is just one of many factors an investor must consider, so do your research, and remember that a higher yield is almost always accompanied by higher risk.

Looking to learn more about investment bonds? RagingBull is a premier destination for investors looking to learn how to make more money. Our team of experts is standing by and ready to coach you through how to invest wisely. Sign up for a free training session with one of our team members on your own schedule to learn more.

Author: Jason Bond

Jason taught himself to trade while working as a full-time gym teacher; his trading profits grew eventually allowed him to free himself of over $250,000 in student loans!

Now a multimillionaire and a highly skilled trader and trading coach, Over 30,000 people credit Jason with teaching them how to trade and find profitable trades. Jason specializes in both swing trades and in selling options using spread trades, which balance the risk of selling options. Jason is Co-Founder of RagingBull.com and the RagingBull.com Foundation which donates trading profits to charity. So far the foundation donated over $600,000 to charity.

It’s been a wacky market, to say the least, as political tensions rose earlier this week… as the Dow futures looked to gap down on Tuesday, only to turn positive on the day.

The Nasdaq and S&P 500 notched record highs this week… and traders are still trying to make sense of the market.

 

 

This morning, Iran came out and admitted they “accidentally” shot down a Ukrainian jetliner. That means we could be setting up for a massive gap down come Monday, who knows. Whatever the case may be, I’ll be ready.

If you’re having trouble finding winners in this environment, I don’t blame you… and you shouldn’t beat yourself up about it.

Tom Brady couldn’t have said it better, In both life and football, failure is inevitable. You don’t always win. You can, however, learn from that failure, pick yourself back up with great enthusiasm, and place yourself in the arena again…And that’s right where you’ll find me. Because I know I still have more to prove.

This actually applies to the markets as well. However, we have to approach it a little differently. For the most part, as traders, we have to journal all of our strategies and see exactly what our money makers are, and where our losses are coming from (if any).

Then it becomes simple, focus on the winning strategies. Right now, my small-cap momentum patterns are working out extremely well, and I want to walk you through a few winners I had this week.

 

Two Patterns, More Than $20K In Profits

 

Last year I started Q1 up about $300,000 and took a 2-month break from trading… and it was all thanks to my small-cap momentum trades. As I reviewed my trades, I realized these are the best plays for me, especially when it’s hard to figure out the direction of the overall market.

So I’m sticking to my guns, and I’ll be focused on these plays for the time being.

Let me show you how it all works… and I want to kick things off with my trusty fish hook pattern. 

Fish Hook Pattern Reels in $12K Winner

It’s really simple with this setup. All I’m looking for is beaten down names that have found a support level and just starting to bounce.

With this setup, there are 3 things I’m looking for:

  • The stock experiences a massive drop.
  • The stock finds support and holds.
  • The stock to catch a small bounce.

Well, I spotted this pattern in Overstock.com (OSTK), and I just knew I had to get in. Just take a look at the daily chart in OSTK.

 

 

OSTK had a massive drop during the last few months of 2019… and found some support. That was a sign OSTK could reverse and catch a bounce.

The thing is, I was a little late to the party, so I had to plan accordingly. Here’s what I sent out to my Jason Bond Picks premium subscribers

 

 

Of course, I was chasing a little because I was stubborn and tried to nail the perfect entry.

However, once I saw the stock running up… I couldn’t ignore the price action, so I decided to get in. I wasn’t looking for a massive winner, just 5-10%.

But the thing is, OSTK had massive upside potential, and it could’ve been good for a 20%+ winner.

Here’s a look at what happened with OSTK.

 

 

The stock hit a high of $8.83 that day… and I sold into the strength. I locked in about 10% overnight, a $9,000 profit overnight! I didn’t want to get greedy, so I sold ¾ of my position, and let the rest ride.

 

With this specific play (since I chased the stock), I need to properly risk manage. Since I already locked in a $9,000 winner, I wanted to let the rest ride. However, for the rest of my position, I actually put a stop-market order.

That way, if OSTK actually reversed, I wouldn’t give back all my gains and turn a winner into a loser.

Well, my order got hit at $8.50 on the remaining shares, so I still came out on top with about a 10% winner overall.

 

 

That was good for approximately $12,000 overnight!

The Rocket Pattern

Another one of my favorite setups is the rocket pattern. Basically, I’m looking for stocks poised to break out… and this was the case in Glu Mobile (GLUU).

I’ve talked about this a lot in Q4 2019 as a January effect trade, and this week I took it.

Here’s what I sent out to my premium subscribers:

“Few weeks swing, maybe more. In play above $6 with range to $7 if it works. Up on a down day today suggests someone is buying and nobody is selling which to me makes it a safer swing in an uncertain market.”

 

If you look at the chart above, GLUU was trending higher and reached a key resistance level. So I took the play.

However, since the market was a little shaky, I decided to take the base hit and lock down a $2,500 winner.

 

 

Last, but not least, I took a momentum play in Genetic Technologies (GENE).

 

The setup you see above is known as a “bull flag” setup. Typically, when we see this pattern, the stock rockets higher… and I was right on the money. Of course, I alerted my Elite clients about this trade… and guess what – this was good for another massive winner.

 

If you want to outperform the market… it’s really simple. Find what’s working and focus on that. That’s what I’ll be doing… and since my small-cap momentum strategy works extremely well in any environment, I’m going to stick with them.

Author: Jason Bond

Jason taught himself to trade while working as a full-time gym teacher; his trading profits grew eventually allowed him to free himself of over $250,000 in student loans!

Now a multimillionaire and a highly skilled trader and trading coach, Over 30,000 people credit Jason with teaching them how to trade and find profitable trades. Jason specializes in both swing trades and in selling options using spread trades, which balance the risk of selling options. Jason is Co-Founder of RagingBull.com and the RagingBull.com Foundation which donates trading profits to charity. So far the foundation donated over $600,000 to charity.