Posted October 08, 2020
By Sean Ring
When There’s Blood In The Streets
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Good Morning, and welcome to today’s Rude Awakening!
Things are looking strong today, and the markets have more than recovered from President Trump’s Tweet earlier this week.
Overall the markets are still looking incredibly bullish in nature, and today we will see how we can use this climate’s high potential for success.
Wisdom From The Contrarians
Right now, it doesn’t seem like much can hold our markets down permanently.
If you look at today’s video, you can analyze the current Put/Call ratio. The Put/Call is a ratio of how many puts are being purchased vs. how many calls, and this is a contrarian indicator.
Contrarian indicators happen to be one of the most highly predictive indicators that the market has.
One of the most famous contrarian quotes of all time came from Baron Rothschild in the 18th century,
“Buy when there’s blood in the streets, even if the blood is your own.”
And as Warren Buffet so famously advised,
”Be fearful when others are greedy. Be greedy when others are fearful.”
When we look at this Put/Call ratio, we can see that the market is almost back to an all time high, which is pretty incredible amidst a global pandemic.
Contrarian Investing Plays
As a contrarian, you want to buy and own the market when everything is coming down, and then sell as everything is coming back up.
So we face a conundrum - the markets are powerful right now and also driving to a higher level, but at the same time they are overvalued.
It’s important to be aware of this as we move forward so we can structure trades with an edge
High Profit Probability With A Short-Term IWM Trade
The trade we are looking at for today is the IWM.
IWM is a Russell 2000 small cap stock, and it has been on a tear for the last ten trading sessions.
10/10 times this trade has been up over 10%. That’s a 10% move in a broad base index in a 10 day period of time. This is incredibly strong and well above the 50-day MA.
The goal here is to look at a neutral - bullish trade on IWM and trade it again in a non binary fashion that will bring us the highest probability of success.
To learn how to take advantage of this IWM trade opportunity with an 81% probability of profit, click here to sign up for the free beta test of the Rude Awakening Pro.
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That’s it for today!
We’ll talk again tomorrow…
Editor, Rude Awakening