Millionaire Reveals Top Trade Idea Each Week CEO, Jeff Bishop, shares his top pick for the week each Monday, straight to your inbox.

“My strategy aims to help you pull one winner out of the market each week, regardless of market conditions!” – Jeff Bishop

Stocks hesitated today, which is not surprising. Here we are, nearly eight months into 2019 and the S&P 500 is up 20% year to date. That’s well ahead of the returns many analysts predicted for the entire year, and I think we can all agree we’ve climbed a pretty steep wall of worry to get here.

This week, there will be more worries for stocks to scale.

The Federal Reserve begins a two-day meeting tomorrow and will announce its interest-rate decision Wednesday at 2 p.m. ET. The central bank’s more accommodative tone was the main reason behind the market’s latest surge to new highs. And while a rate cute is widely expected — and very likely fully priced into the market– if the Fed doesn’t oblige, we could see stocks turn sharply lower.

U.S. and Chinese trade representatives are also set to begin a two-day meeting tomorrow in Shanghai. While there is hope for compromise, our trade policy has been nothing if not unpredictable. And the market has shown us how much it detests escalating trade tensions.

Finally, traders are closely watching earnings. And the company with arguably the greatest potential to move the markets — Apple (AAPL) — is expected to announce after market close tomorrow. Analysts are predicting quarterly earnings will be lower than a year ago on a slight bump in revenue. And some are worried about a slowdown in the company’s services business and softening sales in China.  

You’ve probably heard the old adage, “When General Motors sneezes, the stock market catches a cold.” These days, it’s Apple’s sniffles that have a much greater impact. And a disappointing report from the tech giant could infect the whole market — at least in the short term.

You’re probably starting to wonder why I’m all doom and gloom today. But that couldn’t be further from the case!

In fact, as an options trader, I often find that I can make even faster profits on down days than up days… as long as I utilize the proper tools.

Last week, I told you I rely on a handful of simple-yet-reliable tools to lead me to consistent profits day in and day out with my Trade of the Day. In fact, there are three tools I use.

One is the exponential moving average (EMA) line crossover. This indicator is particularly valuable in choppy markets like we’re seeing now because it can be used to time bullish or bearish trades — often delivering double- and triple-digit gains in a matter of minutes or hours.

The next is the inverse head and shoulders, which is my favorite pattern for timing call option trades.

The third, which I’ll cover today, is my favorite pattern for timing put option trades. Maybe you’ve already guessed it… it’s the head-and-shoulders pattern.

A head and shoulders is a bullish-to-bearish reversal pattern made up of three peaks, with the highest peak (the head) between two outside peaks (the shoulders), which are lower but close in height.

To illustrate this pattern, I’ll show you a recent Trade of the Day that had the potential to make traders 61% in 60 minutes. That’s more than 1% a minute, people!

Below is a 5-minute chart of SPY, the ETF that tracks the S&P 500. This highly liquid ETF is my trading vehicle of choice, and on its chart you can clearly see how the head and shoulders played out.

After the pattern formed, SPY fell sharply lower, allowing those who follow my Trade of the Day to book up to a 61% profit in one hour.

It is impossible to say whether the market will continue to climb a wall of worry or will turn lower. All I know is that I’m ready for either outcome. And so are my Daily Profit Machine members.

America’s #1 Premarket Trader,
Davis Martin

P.S. Should SPY dip below $301.25, exercise some caution. There is significant gap down room all the way to the low $300s. SPY closed today at $301.49 — just 24 cents above that level — so please watch it closely. If you want to trade alongside me tomorrow, you can join here now.

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