We’re just three weeks into 2018 and already the S&P 500 is up almost 5%. The stock market has closed higher in 10 of the 12 trading days this year.

The momentum is strong. The bulls are charging. And everyone wants in on the action.

But there’s a problem… The hotter the stock market gets, the fewer the opportunities for low-risk trades. So, traders either need to sit on the sidelines and wait, search for unpopular trades that haven’t moved yet, or cast their risk discipline aside and just jump on board the charging bull.

I’ve been skeptical of the current run higher since it started on January 2. I don’t trust one-way market moves. So, I’ve been telling folks to sit on the sidelines or buy into the beaten-down gold sector.

Most folks don’t want to hear that. They want to hear that it’s okay to pile into the hot stocks no matter the price and no matter the risk.

But I can’t do that. I can’t tell you to put your money at risk in positions that I wouldn’t touch at current prices. I’d rather you be disappointed with me for telling you to sit on the sidelines than have you disappointed with me for losing you money when the stock market’s rubber band eventually snaps back.

Here’s a taste of some of the feedback I got this week…

Jeff, the market has been soaring and a lot of money is being made except us. You have us watching on the sidelines. Luckily I didn’t go for the last little losing trade with FAZ.

Let’s get going with selling some real naked puts on good, hot stocks and then sell the calls if put to us. Just pull the trigger on good stuff, there’s plenty to choose from. 

– Rene S.

Hi Rene. Thanks for writing in.

I understand your frustration. But, since I earn my living as a trader, I have to stay focused more on risk than on reward. And, the “good hot stocks” you apparently want me to recommend simply have too much risk at this point to offer a favorable risk/reward trade setup.

I’m glad you didn’t get hit with the loss we took on the FAZ trade. That seemed to me to be a low-risk way to trade in anticipation of a market reversal. I was wrong, and we took just over a 2% loss on the position.

Tell me, though… did you trade any of the gold positions I’ve recommended over the past few weeks?

We just closed the Goldcorp (GG) call option trade for a 155% gain. And we’ve traded the VanEck Vectors Gold Miners Fund (GDX) calls a couple of times as well. We earned 142% on the first trade, and we just sold half of the second trade for a 100% gain.

Gold stocks may not be the “good hot stocks” you’d like to trade. But they’ve been giving us some good opportunities for big gains without a whole lot of risk.

[A beaten-down restaurant stock]? Really. We’re in a raging bull market in an earnings period and, among all the possible choices out there, you pick [a beaten-down restaurant stock]?

Are you crazy? Sorry, this may work but not for me. Not a confidence builder.

– Jay D.

Hi Jay. I tried to find an artificial intelligence company that uses blockchain technology to fund marijuana farms… but I couldn’t find anything that fit my risk/reward parameters.

So, I went with a fundamentally cheap restaurant stock with a good technical pattern.

I’ll try to do better next week.

Best regards and good trading,

Jeff Clark

P.S. No matter how hot this market gets, in the Delta Report, we’ll stick to principles.

We find great trades every week not by chasing fads, but by targeting beaten-down sectors and making outsized gains when they snap back. We shun risk, not chase it… and we’re rewarded in return.

To learn more about a subscription to the Delta Report, click here.

Reader Mailbag

Today, Market Minute readers chime in…

I do not subscribe to your Delta Report service (or any other, for that matter). I steer my own boat.

Your analysis for your position today is spot-on. Sometimes the greatest reward follows the most pain. Tell your naysayers to pull up their big-boy pants and tough it out.

– DF H.


I appreciate your hard work, expertise, and integrity. I like your Market Minute and learning your trading knowledge.

I think the market is going up because of tax reform, computer algorithms, and worldwide affluence because of money printing. I think it will go up for some time and flat for some time and again pick up later in 2018. Gold price cannot go up so long as paper trading in futures and someone dumping billions of dollars of futures suddenly as I see Zero Hedge reporting.

I see this for the last several years and no one is able to stop this. COT report is just a good report – does not mean much. Just like bitcoin has less volatility now since futures started trading.

I am slowly trying to get out of gold, like Buffett.

– Uppunda B.

As always, feel free to send in your trading stories, questions, and suggestions right here.