Within the last couple weeks the headline consensus is that money is rolling out of AI and looking for a home. It is no longer a question of if but more of where to. Our bargain trade of the week takes a look at one place that is a solid candidate and even found a trade for less than $1.

But, and there is always a but, it is in the broader context of some adjustments that are must-dos in this shifting market. It was a topic Keith Harwood and I touched on in a quick chat yesterday and it can’t be emphasized enough. Let’s look at the trade and emphasize the changes you have to make right now.

Overthinking a trade can be disastrous. Keeping it simple ensures quick action and less stress. Ian Cooper has been making trading as simple a possible for traders by sending them only what they need to take a trade with 100% confidence. And his follow up notes to “take the win” popping up in the inbox are the best news you’ll get. Don’t believe it? Give it a test run for just $1.

In yesterday’s afternoon update we noticed that financials are pulling in some buyers and are a likely candidate to get the upside of the big rotation. This is XLF, the financial ETF and it has some highly liquid options that make it an ideal candidate to exploit the money flow.

It was on a tear leading into the election barrel roll that the market did and in the last couple sessions it has picked up where it left off. We noted yesterday that the  Jan 15 60 calls are at about .95 and they still look good this morning. Worth considering entering when markets open.

The big things to make sure you reset as we come out of the election and head into the end of the year is that the AI foundation that supported the seemingly endless rally is crumbling. Add to that we can expect big money to reallocate in the next few weeks as we head into the end of the year. Portfolio managers are going to want to lock in as much of the gains as they can and it could make charts display some really odd moves.

The best approach to this is to adjust position sizes and shift the amount of your trading capital to make sure you keep a protected base that tolerates unexpected moves. If you are trading 20% of your capital, consider 15%. If your trade size is $500-$1000, stay closer to the $500 side. Of course this is all relative to your account but hopefully you get the picture. I want to make sure everyone is still reading these posts in a month or two and aren’t getting wiped out.

Be disciplined and now is the time to keep your trading log up to date. Not only will it keep you alive, it will give you some really great tips to turn back to the next time things are this crazy.

Keep learning and trade wisely,

John Boyer

Editor

Market Wealth Daily