Happy Memorial Day, Evolvers!
I’m gonna keep today’s letter short and sweet because I’m sure you’re all busy studying on your day off … right?!
Well, I’m busy too — busy preparing for the Shadow Trades Summit this Thursday, June 2 at 8 p.m. Eastern!
Will I see you there? Reserve your spot NOW…before it’s too late!
Now that you’re signed up, I wanna step back and give everyone some perspective on the markets.
I’ll briefly discuss my thoughts on the major indexes, which are the charts every trader should be paying attention to right now.
Let’s break down the one big question in the markets right now — and why the answer may actually be good for ‘shadow traders’…
A few weeks back, I showed you some technical analysis I’d done on the Invesco QQQ Trust (NASDAQ: QQQ) weekly chart. See the chart below…
I mentioned that the 200-day exponential moving average (EMA), represented by the purple line on the chart, has been rock-solid support for more than a decade.
In other words, QQQ hasn’t traded below its 200 EMA since July 2009. That’s incredibly notable.
You can see how many times the chart has bounced off its 200 EMA by looking at the white arrows on the chart.
So, when QQQ nearly tested this all-important support level on Friday, May 20 — the index found a near-term bottom. Again, you can clearly see this on the chart.
Hmmm … I wonder if anyone predicted that?
Then, the chart volleyed into an epic ‘bear market rally’ as QQQ surged nearly 9% in three trading days to cap the week off in style.
Again, I called this. I said that if the weekly chart got close enough to its 200 EMA, it was time to consider getting aggressive on the long side. Sure enough, I was right.
Now, look at the blue line on the chart. That’s the actual long-term trendline support for the index. If QQQ loses its 200 EMA at any point, look out below. Specifically, look down towards that blue line.
So, now the question is this — can we trust this ‘bear market rally’? Was that really the bottom? Or will the house of cards come crashing down again, just as it has after every attempt at a rally since November 2021?
The truth is, I can’t answer this question. No one can. All I can tell you is to be prepared for anything. Don’t get ahead of yourself on the long side, but don’t get stuck buying puts at the bottom either.
Just because the indexes boosted for a few days doesn’t mean the bear market is completely done with. But you’ve gotta be ready for whatever happens next.
And luckily for you, my new shadow trades strategy fits these market conditions like a glove…
I’ve been getting a ton of questions about shadow trades. If you wanna know the finer details of my brand-new strategy, you have to attend the Shadow Trades Summit this Thursday, June 2 at 8 p.m. Eastern.
But I’ll say this … the beautiful thing about shadow trades is that they work no matter what the broader market is doing. Better yet, you can use shadow trades to go both long and short.
I don’t know of any other strategies with that level of flexibility, do you?
I’ll see you all on Thursday, where you’ll learn a lot more about the strategy I’ve been working on for over a decade.