Not much happened in the stock market last week. The S&P 500 finished the week pretty much right where it started it. And the trading range for the entire week was only 14 points.
In other words, in a stock market with millions of participants, and trillions of dollars in play, the difference between the highest and lowest points – for the entire week – was a mere 0.6%.
As a trader, it’s hard to make money when the market doesn’t move. So last week was frustrating for a lot of folks.
But I liked it.
You see, periods of low volatility are always followed by periods of high volatility – and vice versa. A tight trading-range market allows stocks a chance to build up energy for their next big move. The technical indicators flatten out. The various moving average lines all coil together.
Then, when stocks have consolidated long enough and most traders have been bored to sleep… BAM! The next big move kicks off. Volatility explodes. Trading ranges expand. And traders who are ready for it can make a year’s worth of profits in just a few weeks.
We are approaching that point.
For the past few weeks I’ve had a tough time coming up with trade recommendations for my Delta Report subscribers. We’ve done well anyway – with a 136% gain on Target (TGT) in four days, a 70% gain on the iShares High Yield Bond ETF (HYG) in nine days, and a 20% gain so far on the trade I recommended last Tuesday. But it’s been murder trying to find those trades.
Normally, when I perform my chart review every Saturday morning, I can come up with about a dozen potential trade ideas. From that list, I narrow it down to the one best trade each week to offer to subscribers.
But, for the past few weeks, there hasn’t been much to choose from. There have been maybe two trade setups that caught my eye each week. And even those ideas needed an extra day or two to set up properly – which meant I’d push my normal Tuesday publishing deadline to Wednesday or Thursday.
My point is… It’s been really hard to find good trades in the current low-volatility environment.
But this past Saturday was like Christmas.
There are about three dozen trade setups that look good to me this week. That’s the longest list I’ve had in over a year. And that’s what happens when stocks consolidate in a tight trading range for an extended period, volatility contracts, technical indicators coil together, and most traders get bored by the inactivity.
After last Saturday’s chart review, I am looking forward to trading for the next few weeks. I expect we’ll see lots of action, an increase in volatility, and plenty of opportunities to make quick, profitable trades.
In fact, for the first time in… I don’t know how many years, I’m going to make two trade recommendations in my weekly newsletter. I normally just pick my best idea. But, there are so many good setups to choose from this week, I have to recommend two.
Plus… earnings season kicks off next week.
Like I said… for this old trader, it feels like Christmas.
Best regards and good trading,
P.S. Like I said, earnings season – our busiest and most profitable time of year – is right around the corner. And my Delta Report subscribers stand to reap HUGE rewards from the setups I’m seeing. Learn more here.