14 March 2021

Every Simple Trade Starts Here

Read the whole post for a low risk trade idea worth 15% or so in the short term. 

Of the thousands of trades I've taken over the years, every one has started the EXACT same way.  There was a chance that it would be a winner... and a chance that it would lose me money.

That's how your trades work too.  At the moment of entry, it might work... and it might fail.

With that knowledge as a backdrop I'd like to share an idea I've been noodling about all weekend...

But first, have a look at an idea that I posted way back in 2019.  The world hadn't yet heard of Covid... at least not what was to come.  But there was worldwide consternation about the relationship between the US and China at the time.  That gave me the idea of looking for stocks that were down as a result of the noise.

Fortunately, my former employer was happy to oblige as seen here.

Fast forward a mere 2 years and the result is quite interesting.

That would have been quite the portfolio.

At any rate, the idea I've been thinking about all weekend is this... Old-line stocks have been outperforming technology as reflected by the Nasdaq 100 all year.

A pretty safe trade would be shorting banks via the ETF XLF and buying technology via QQQ [and if you're aggressive, TQQQ].

As you can see, the historical relationship is pretty clear.

And the performance divergence since the beginning of the year is pretty clear as well.

All the 2 sectors need to do is resume their longstanding relationship, the gap closes and you can pick up 15% or so for your trouble.

A little more "fancy" than the trades I normally mention here, but I saw it so I thought I'd mention it.

Hope it helps...


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