The approach we have been going back to still seems strong.
In all fairness, bad news is subjective and as traders we need to be objective. Whether stocks go up or down is somewhat irrelevant. We need to find trades in any market. The latest earnings news offers more support for a continuing downtrend than it does for any kind of sustained recovery. Microsoft and Meta had positive reports but Amazon, Netflix, and Apple didn’t report what traders were hoping for. Add this to the existing gravity that has been pulling the market down for months and it is safe to expect a continued pull to the downside.
We have been following leveraged ETFs and in this climate the inverse leveraged ETFs are getting more and more attractive. SQQQ in the chart above shows momentum to the upside and support at its 10 day moving average. Taking a look at call options the May 20 Calls at 50 are 2.72 and if SQQQ works its way back up to its recent high of 50, that could double.
Looking for the overall momentum and then using it to increase your probability of a win is simply smart. Joe Duffy has a great shortlist of setups he uses to do just that. You can grab it here.
Keep learning and trade wisely,
Market Wealth Daily