Archive Category: Wednesday Windfalls Alerts

As I mentioned above, the S&P 500 is not in the multiweek pullback position we target for our Wednesday Windfalls trades. I’m not surprised to see a majority of individual stocks in the same boat. Nevertheless, our system identified three stocks that have pulled back over the last few weeks. They also meet the other criteria of our buy signal, and the pricing of their call options contracts is favorable. This strategy is about making plays on individual trade signals rather than concerning ourselves with what the broader market is doing.

Stocks are up today on inflation coming in “less hot” than the previous month’s reading. But the gains we see in the three plays we made this week aren’t enough to make up for yesterday’s down day. All three call options we bought are in the red, down between 42% and 72% at last glance. That means we’ll take a loss this week. Of course, I’ll get into the details of this week’s trades in your Weekly Trade Wrap tomorrow.

One criterion our system has is that a stock or exchange-traded fund (ETF) must be in a deep pullback over several weeks. How I define that state is, well, algorithmic and proprietary. The essence is simple, though: We want to buy stocks or ETFs that have experienced near-term beatdowns. For innumerable reasons, individual stocks can get sold too aggressively in the short term. Once bullish investors figure out what’s happened, they step in to buy up the discounted pricing.

Shares of Carnival Corp. (CCL) jumped strongly yesterday and have continued to push higher today. We have a triple-digit win on this play, which should more than compensate for the losses we’ll be taking in our other two trades. Since shares of iShares China Large-Cap ETF (FXI) are just slightly above where they were on Monday afternoon, we’ll likely take only a small loss on our FXI calls. Our losses on AT&T Inc. (T) will be heftier. But still, I expect we’ll exit this week’s trades with a net profit. Of course, I’ll get into the details of this week’s trades in your Weekly Trade Wrap tomorrow.

Stocks rallied last week after the Federal Reserve’s latest rate-hike decision, which came out right when our strategy would have closed its trades: Wednesday at 2 p.m. That means it worked out just fine that our strategy produced no valid signals last Monday, causing us to have a rare “skip” week. Now, we’ll see what this week has in store for us! I combed through about three dozen valid trade signals this morning, analyzing which ones give us the most “bang for our buck” in terms of options pricing. As we often do, we’ll make three bullish plays in unrelated sectors. I have one ETF and two individual stocks for you this week.