Hey traders,
Can you believe it’s August 26th already? It feels like just yesterday that markets were “melting down,” but that was over three weeks ago — Friday, August 2nd and Monday, August 5th, to be exact.
The market chaos we all felt has already started to fade from memory, but the lessons we can learn from it are still as sharp as ever.
Think about all the noise and chaos you’ve heard since the beginning of August.
The Fed… recession fears… earnings reports flying left and right… and just last week, it seemed like everyone and their mother was glued to Jerome Powell’s every word.
The headlines were screaming, the pundits were panicking, and if you let the news get to you, you might have thought about sitting out of the markets entirely.
But that would have been a mistake.
One thing I’ve learned in my nearly 40 years in the markets is something most people don’t realize:
There’s always a bull market somewhere.
Two weeks ago, I shared a list of 8 stocks that held strong, even while the market was melting down at the start of this month. And guess what? Even today, three weeks later, those stocks have barely wavered.
Sure, some of them were doing so well that they eventually cooled off a bit and touched their short-term 20-day moving average.
That’s not only normal, but completely expected.
None of them turned into losers. Plus, that’s exactly why I always tell you that buying options should be RARE.
Instead, you should focus on selling options… on creating income using a stock’s momentum.
If you had traded a well-constructed 3-day credit spread with any of these stocks, you’d be sitting pretty.
Even if you had done a naked put or a covered call, you’d be golden.
That’s why I went on such a rant last week about all the attention on Powell’s speech. These stocks weren’t worried about Powell’s speech, and you shouldn’t be either.
The market noise will always be there.
But by sticking with strong trends and using income strategies that don’t rely on guessing the market’s next move, I’ve learned that I find myself on the winning side more often than not.
Remember, there’s always a bull market somewhere — you just need to know where to look and how to trade it.
Trade well,
Jack Carter