Rachel’s note: Regular Dispatch readers know we like putting wealth-building insights from other experts on your radar.
Today, we’re sharing an essay from our friend and colleague Jeff Clark. Throughout his career, he’s nailed over 700 winning trades. And he’s revealing his latest breakthrough nearly 40 years in the making…
It’s a special opportunity for traders to potentially double their money as often as every two weeks. Jeff will share all the details in his presentation on Wednesday, April 28 at 8 p.m. ET. Just go right here to sign up for the free event.
Then, make sure to read on for today’s essay. In it, Jeff describes how everyday investors can use his system to beat Wall Street…
By Jeff Clark, editor, Market Minute
If the past year has shown us anything, it’s that the rules of the stock market are slowly but surely changing…
And that the balance of power has gone completely out of whack.
More and more, it seems like the hedge funds and institutions of Wall Street are losing power to the little guy. Where before it seemed like no individual could find an edge against Wall Street, the power of sheer numbers and groupthink has found a way to best them.
Now, a lot of this likely has to do with the stimulus checks that the U.S. government sent out to citizens over the last year. Since the pandemic started, any single individual earning up to $75,000 a year – already more than most folks – has made as much as $3,400… And all from doing nothing but working and paying taxes in the U.S.
That’s a lot of extra cash suddenly sloshing around in ordinary folks’ bank accounts. For some, it’s more than they’ve had in their whole lives.
At the same time, those folks have watched the market climb higher all through 2020, even making new highs as the pandemic raged on. It’s only natural that they’d want to get in on the action.
In my view, this all culminated in late January, when a group of everyday people on Reddit managed to band together and send GameStop’s (GME) stock over 5,400% higher than it was at the start of 2020.
I’m sure I don’t need to recap the whole story for you. It was the top story on every mainstream financial news channel. It was practically being shouted from the rooftops at the time.
But what’s important to understand is that a group of regular people with just a computer and a keyboard were able to shake a multibillion-dollar hedge fund out of a bet against GameStop’s stock – and bankrupt it in the process.
That’s powerful. And, I don’t think it’s the last time that something like this will happen.
Of course, most bystanders of the GME debacle wondered if there was a way to be in the “right place at the right time.” To be able to catch a move like what we saw with GME is more than many professional investors can say they’ve done over their whole career.
And it’s funny… Because just a couple years ago, I devised a method to be in the exact right place, at the exact right time… And in the exact type of low-priced stocks that these newly cash-flush investors like to target.
I call it the FLIP Trades System. And it’s led to some of the biggest gains I’ve ever seen – just by buying and selling stocks.
Let me give you an example…
Take a look at this chart of GameStop…
Now, it might seem like there’s a lot going on here. But it’s actually quite simple….
See those three colored lines tracking along with the stock price in black?
These are “moving averages.” Traders use these to show the average price of a stock over a specific period of time. A 100-day moving average, for example, shows the average price the stock traded at over the past 100 days.
These moving averages make up the basis of my FLIP Trades system. Note that my system uses three specific moving average lines to generate buy signals. And, out of respect for my subscribers, I can’t reveal exactly which ones they are today.
But what I can tell you is moving averages, with the proper arrangement, make for a strong trading tool…
In the above chart, you can see three different moving averages for GameStop. And as you can see, they’re all pretty close to the price of the stock.
Traders often use the lines as support and resistance levels. If a stock is trading above one of its moving average lines, it’s generally seen as bullish – especially if it’s over a longer timeframe.
If the stock comes down to touch one of those moving averages, it’s seen as a strong support level. And, vice versa – stock prices below the averages signal a bearish trend and overhead resistance.
But, I look at these moving averages differently from most traders…
Take another look at the chart above, at the green circles. See how the moving averages seem to “coil” together in June? That means that the stock price is right in line with the moving average on several different timeframes. And, it suggests the stock has spent a lot of time around a similar level.
In bull markets, this doesn’t happen often. Usually a stock is trading above one or more of these lines, and they’re spread far apart. But, I’ve observed that when these moving averages “coil,” it tends to signal an imminent jump higher in the stock. And when the stock price breaks above these lines, it’s off to the races…
Let’s take another look at the GME chart, a few months later…
The green circle shows the timespan we were looking at in the first chart. As you can see, the coiled moving averages acted like a coiled spring. When all the averages come together like that, the stock builds up tension, or energy.
And when some buying interest comes into the stock – whether it’s from a favorable comment from an analyst, or a band of Redditors rushing in – that energy releases… And you can see the results: GME stock more than quadrupled from August to December. (Keep in mind, this was months before the GameStop story became mainstream news.)
These lines are what make up the basis of my FLIP Trades system. And, I’ve been following this system for far longer than the GameStop saga. In fact, I’ve recommended trades just like this to my subscribers that went on to rise 130%, 148%, and even 158%.
And while GameStop might seem like a rare event, my research shows that 2,667 stocks soared 100% or more last year.
That’s why I created the FLIP System. It’s a way for the everyday investor to identify these seemingly rare trade setups. And, even better, it’s geared toward the kind of low-priced stocks that have exploded in value over the past year.
If you want to learn how to start using the FLIP Trades system to find these types of profit opportunities, you have to attend my webinar on April 28. There I’ll show the system in action, and even give you three trade setups with the potential to double your money, just for attending. Sign up right here.
Best regards and good trading,
Editor, Market Minute