Justin’s note: No matter where I am in the world, at Casey Daily Dispatch, my job is to find you the best ways to make money – in whatever market environment we’re in.
And right now, as I’ve been showing you, volatility reigns.
That’s why today, we turn again to master trader Jeff Clark, who says it’s times like these where we can make the biggest gains.
Below, Jeff gives us an exclusive peek at his strategy… and shows us why now is the perfect time to use it…
By Jeff Clark, editor, Delta Report
Today, I’ll show you what will be the most profitable investing strategy of 2019.
You might be skeptical. You might wave it off as “reading tea leaves.”
But if you use this strategy, you’ll be able to double your money over and over – while most other investors rip their hair out.
I’m talking about technical analysis.
Now, when you hear “technical analysis,” you might picture day traders drawing triangles on chart screens. The charts probably look more complex than anything you’ve seen before.
It might seem “scientific”… Even a little bit intimidating.
But really, technical analysis is much more of an art than a science… That is, if you try to force it to conform to strict rules and formulas, it’s likely to be wrong almost every time.
Try thinking of it the way I do… A short-term chart of a stock (or index) is simply an emotional picture of the stock at a specific moment in time.
Stock charts tell me how traders/investors are responding emotionally at any given point in time. Human emotions are remarkably consistent. We tend to respond the same way, over and over again, to the same circumstances.
So if I can go back into a chart, find a time where the conditions were similar to where they are today, and note how the chart behaved afterwards… it can provide strong clues for what to expect in the future.
But technical analysis is emotional. It evolves over time. Conditions that used to provide a catalyst for a big move may need to get more extreme to cause a similar movement the next time.
Think about it this way…
When I first got married, I’d often come home from work, take off my socks, and drop them on the floor next to the couch in the living room. My wife would come home, see my socks on the floor, and get all ticked off about it. In other words, she’d have an emotional reaction to her husband leaving his socks in the middle of the living room floor. This happened over and over again.
Now, think of how this reaction looks on a typical stock chart…
It starts with a line trending sideways – my wife’s emotions before she knew all about my sock habit. You can see the line climb as my wife got more and more frustrated…
Eventually though, my wife got a little better about dealing with her slob of a husband, and I got a little better about not leaving my socks next to the couch. Leaving my socks on the floor no longer elicited the same reaction from my wife.
She still had the same emotions. But she had adapted. She had evolved. She suppressed her emotions and would need a bigger catalyst before getting upset with me again…
Over on the chart, things have calmed down. The line on the chart is headed sideways, with little action in either direction. There’s less volatility.
But in the background, energy is building. Those socks had to be going somewhere… and it wasn’t the hamper.
Remember, human emotions don’t change. They’re remarkably consistent. But emotions do evolve, and sometimes it takes a bigger catalyst to elicit the same response.
That catalyst was provided when my wife was vacuuming one day and moved the sofa in order to vacuum the carpet beneath it. She found about a dozen pairs of my dirty socks tucked beneath the couch.
You can guess what happened next on the chart…
Here’s my point…
Profiting in a Crazy Market
Like the charts above, a short-term stock chart is simply the emotional representation of traders and investors reacting to the stock.
If we can spot previous patterns on the chart that look similar to how that chart looks today, then we can see how those previous patterns played out and then trade the stock in anticipation of a similar reaction.
A lot of my trading strategy revolves around finding emotionally overbought/oversold conditions that are ready to reverse. Technical analysis helps me identify conditions where investors’ emotions have gotten extreme, and then I can see how stocks have reacted to similar conditions in the past.
This is exactly what traders should be doing in 2019. In the volatile market we’re seeing today, any extreme condition is likely to reverse. Likewise, any overly calm condition is likely to explode with energy in due time.
And here’s why: Periods of low volatility are always followed by periods of high volatility – and vice versa.
Consider this… In 2017, stocks just kept marching higher. Overbought conditions just got more overbought. There was nothing for traders to do. No volatility.
At the beginning of 2018, the stock market had just come off the least volatile period of the entire bull market. Investors who figured stocks would go up forever were greeted with massive drops in February, October, and December.
And here’s the thing… I think we’re in for an even crazier year in 2019.
Most long-term investors won’t know what to do. But this is exactly the environment where guys like me (traders) can thrive.
Like I told my subscribers last week, investors should take their gain for the year and sit this one out. It’s probably the best way to keep your portfolio intact.
But for traders who pay attention to technical analysis, there are opportunities to profit … every single trading day… no matter what the market does.
Best regards and good trading,
Editor, Delta Report
P.S. No matter how bad the market gets, know this: You don’t have to be a victim.
A lot of folks lost everything in 2008. It was one of the biggest stock market crashes in modern history.
But there’s something you likely didn’t know about 2008. A certain group of people made out like bandits…
I just released a brand new presentation where I show you where the stock market is headed this year… and reveal the methods that doubled my subscribers’ money, over and over again, even on the ugliest days of the 2008 bear market.
Get in on the full story by going here.
Do you plan to sit on the sidelines in 2019? Or will you take advantage of the environment where traders thrive? Let us know at [email protected].