Do you remember when I said a few weeks ago that we could see the market rally when the Fed takes a breather on rake hikes?
That’s exactly what we’ve seen. And as a result, the Dow is now at new 52-week highs.
This is significant because if you’ve been following me for any amount of time… You’ll know that I love new 52 week highs.
Because contrary to what most people think, a new 52 week high means we’re more than likely going to see that ticker go even higher!But nothing in the market is guaranteed.
So today I’ve got 2 tips that will help protect you if you decide to play this Dow rally.
- Use Stops – Set a stop 7% lower than your purchase price. You can even use a trailing stop where as the price of the security rises, the stop rises along with it. So if the price falls suddenly, you’ve got some gains automatically locked in.
If you want to get fancy, you can use an OCO order. That stands for “one cancels the other”. So you’d set a sell order, for example, $12 above your purchase price and a sell 7% below your purchase price. Which ever one is hit first cancels the other one. This is a great way to trade so you can choose your exit plan ahead of time and go live your life without being stuck at the computer all week. - Buy a Put – If you are trading a particularly volatile stock, you can buy a put option with a strike price that matches your purchase price. That way, if the price of the stock goes down the put will soar.
It’s a form of insurance you can use at particularly volatile times or on volatile stocks.
So there you have it. Like I said, the new 52 week high in the Dow signals to me that we could see a continued rally.
But considering nothing in this market is guaranteed, those 2 tips will help keep you safe.
Trade well,
Jack Carter
P.S. If you choose to play the rally, remember what I always say: Only a tiny portion of your trading portfolio should ever be in speculative plays.
The bulk of my trading money is always in income trades because it’s the most consistent way to trade that I’ve found over the years.
But some people hear “income trading” and they run for the hills because they think it’s slow and boring. Not so! Take a look at this video I recorded to show you how I’ve been seeing some supercharged returns from my income trades.
