Make Way for the Bears
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Expect Wild Moves in the VIX
The market is closed just one day this week – but traders are staying away for longer.
Many people take the entire Thanksgiving week off. And with so many traders away on vacation, liquidity stinks.
Volume is low… and none of the longs are here to defend this market.
This allows the shorts to step in and pull stocks down…
While the VIX goes up.
Hence, my official VIX Traffic Light change – to yellow.
What does this mean… and how can you trade it?
With my light officially in yellow territory, we’re looking for wild moves in the VIX. We could see a run at 25, a collapse back to 15 – or, most likely, both!
This is an illiquid market. And in this kind of market, we can see a face ripper in the VIX until the middle of December, when we typically hit a big buy in the market into the holiday season.
The best way to play this is by going long calls in VIX, UVXY, and VXX as the fear index moves higher.
Nordstrom Is Officially a Dumpster Fire
- Nordstrom Inc. (NYSE:JWN)
JWN is eating it after horrible third-quarter earnings. Analysts were expecting earnings of 56 cents per share – they got 39. Labor costs hurt the retailer’s profits and sales. And Nordstrom Rack just can’t return to pre-pandemic levels.
I’m just happy we got out of our calls at this point. Because we’re looking at a major management issue here. I mean, look at TJ Maxx. It does the same thing as the Rack, and it reported great earnings.
Frankly, this stock is a dumpster fire. It should be taken private by the family. And you should stay far, far away.
- Chimera Investment Corp. (NYSE:CIM)
This REIT hit my radar after a Money Morning LIVE viewer put the ticker in the chat. At about $16.70 a share, this isn’t a stock you’re going to wake up to and see a $25 price tag. But it could make a run above $17 – and if it does, the January $17 calls for about $0.30 could turn a low-dollar win into a massive percentage gain.
- Energy Select Sector SPDR Fund (NYSEARCA:XLE)
Biden’s SPR announcement is going to help oil names – that’s why, yesterday, I gave you a brand-new Profit Takeover trade on XLE.
And that trade filled at $1.70 – meaning you can now track it in our online portfolio.
Stay tuned for an exit instruction on this trade! It’ll hit your inbox when it’s time – or you can click here to sign up for text alerts.
You Could Make 300% on SNAP
It fell more than 20% after missing earnings expectations in October. And it has yet to recover:
But according to this big-money put sale, it may have hit a bottom:
This trader sold almost 31,500 of the SNAP December 3, 2021 $44 puts, collecting $0.24.
When I look at this trade, I see a line in the sand.
You only sell that many puts when you think a stock is done dropping. It might not go up, but we’ve most likely found a floor.
I’m not hopping on the SNAP train quite yet though – I want to do my research first.
And that’s exactly what I’m going to do during my Profit Revolution live sessions next week. As we explore SNAP together, we’ll know when it’s time to jump on the social media stock…
And when we do, I expect to see a 200%, 300%, even a 400% winner in 30 days or less.
Want to come along for the ride? Click here.
But if you’re more interested in pouncing on a trade right now, then check out this big-money steel play on Vale SA (NYSE:VALE)…
A customer bought 17,440 of the January $14 calls for $0.43, then sold the $17 calls for $0.08, paying a net $0.35 for a three-point vertical on this Brazilian steel company.
This is a commodity play – a direct bet on Vale making a run above $14. And you know I’m bullish on steel.
But I don’t like playing Brazil.
If I want to play steel, I’m doing it with the United States Steel Corp. (NYSE:X).
More specifically, with the December 17, 2021 $26 calls for $1.35.
Have a great Thanksgiving, everyone,
Mark Sebastian
Founder, Profit Takeover
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November 24 2021
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