Spotting a great discount trade doesn’t have to be complicated.

It is very easy to overcomplicate things when you trade. It is even easier when you have been trading for a while and are constantly adding new tools to your arsenal. But if you can occasionally step back and take a broader, more simplified look at things, it is surprising how trades with big potential can pop up.

Let’s take a look at what we know. Things are much more expensive than they were 6 months ago, and way more expensive than a year ago. Wages haven’t risen anywhere near the rate prices have. It seems pretty logical that luxury items are going to see a drop and people are going to start looking for bargains on the staples they have to have to get by.

Yes, there is a TON of nuance that is glossed over in that observation. But, at the end of the day, it is true. So if you take that context and then ask what companies are going to benefit in this type of environment your start to narrow down the stocks that could climb as inflation grows.

Now filter out stocks that make have been excessively drawn down by the overall market decline. For example, people are very likely to go to discount stores to get staples even if they had been used to more premium items in the past. take a look at Dollar General’s chart (DG):

Dollar General is ubiquitous and known for super low priced staples. DG Is pushing towards a new all time high. It could definitely keep rising, but it would hardly meet the definition of a bargain.

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WalMart is probably one of the biggest discount staples providers. It has recently been beat up and it’s drop could be exaggerated by an overzealous market that feeds on itself.

You can see that it plummeted, but then found support and is working to recover. The MACD also shows upward momentum with more room to run. We are going to keep an eye on this one and see what it does.

Don Fishback has put together one of the best, quick reads to confirm bargain trades have the greatest likelihood of paying off. By using simple logic to find a trade and his approach to confirm the odds are in your favor your can transform your trading. Grab his guide here.

Keep learning and trade wisely,

John Boyer

Editor

Market Wealth Daily