The Stock Bubble Has Popped!

Dear New Money Club Member,

It feels like déjà vu. Just a few weeks ago, stocks were at all-time highs… 

Then came a double-digit drop, like the one in mid-February, and now the July surge is a total wash. So, what next?

Well, next Wednesday will be the last trading day of the month/quarter — so wake me up when September ends. 

In the meantime, here are some interesting stats to help keep things in perspective…

No. 1, after stocks roared higher from their March lows, we saw a sharp pullback in June that lasted 21 days in the S&P 500. After that shakeout, stocks climbed higher. 

But yesterday’s drop lower marked the 21st day of the most recent pullback. We could begin to see buyers step in here. 

But I want to be frank: The stock bubble has popped. The last six months in the market have been extraordinary, but only a handful of stocks have benefited.

Now, I'm not saying the market’s going to crash, but we're also not going to see stocks skyrocket like they did in July and August. In short, euphoric FOMO buying is over.

As of now, the fear gauge for the S&P 500, known as the CBOE Market Volatility Index (VIX), is at 27. That means volatility is two times the normal — and we will see a fast, two-sided market. 

This is great news for us because uncertainty creates more opportunities. It’s what we call a trader’s market, and soon I expect you’ll be stacking more triple-digit gains (as we were able to do last week in TSM and MLCO).

With that, let’s talk about our newest positions this week…

Portfolio Update

On Tuesday, we elected to:

  •     Buy to Open Vonage Holdings Corp. (Nasdaq: VG) Dec. 18, 2020, $11 calls (VG201218C00011000) up to $1 per contract or better, for the day.

It’s not typical for us to jump into a longer-dated play, but New Money was likely jumping into this expiration to have enough time to play out. 

Right now, we’re holding:

  •     Nordic Amer Tankers (NYSE: NAT) Oct. 16, 2020, $5 calls (NAT201016C00005000).
  •     Melco Resorts & Entertainment (Nasdaq: MLCO) Oct. 16, 2020, $20 calls (MLCO201016C00020000) — 50%.
  •     Regions Financial Corp. (NYSE: RF) Oct. 16, 2020, $12 calls (RF201016C00012000).
  •     Vonage Holdings Corp. (Nasdaq: VG) Dec. 18, 2020, $11 calls (VG201218C00011000).

Now we wait and let the market come to us. This sell-off has put us behind the eight ball, but we have time. Patience and persistence are key, and I’ll be keeping you updated every step of the way.

Congrats on Your Wins!

Markets move quickly and often we find ourselves moving onto the next trade without looking back.

However, when we have the chance to take a big profit — it’s important to take a second and celebrate your victories.

Here’s what some of you are saying:

“I was only able to buy 1 contract of TSM and I made close to $200. Thank you for giving me the chance to learn options trading and a big break to get in this program.” — Syed

“So far after one week in the club, I’m impressed!” Daniel B. said after making $2,380.05 from the TSM trade.

And another subscriber was able to lock-in $236 on one TSM contract for a 207% gain! 

If you were able to take profits on either TSM or MLCO, congrats. We’re a group of outsiders who need to stick together to beat Wall Street at their own game. It’s great to hear that some of you were able to trade these successfully — keep your feedback coming!

That’s all from me this week. But I’m looking forward to answering your most pressing questions this upcoming Wednesday. If you want yours included, send it to questions@newmoneycrew.com. 

Have a great weekend, and I’ll have a new trade for you on Monday.

To your wealth, freedom and options!

Joshua M. Belanger

New Money Club