I’m writing to let you know that, unfortunately, we will soon no longer publish Two-Stroke Trader. But don’t worry, I’m not going anywhere until we’ve closed all our open positions.
I enjoyed our journey together and hope you’re a better trader for it. And while I’m sad to see this service go, I think you’ll be excited about what’s coming next…
I’ve arranged for you to receive Jeff Zananiri’s Money Flows Elite service for the next 12 months at no charge!
In case you’re not familiar with Jeff and his background, he spent over two decades on Wall Street seeing firsthand how the best made consistent money in the market. He mastered the art of trading as part of a small group that turned $5.1 million in seed capital into over $700 million.
He then went on to enjoy a career with the most elite firms on Wall Street before becoming a top trading expert with WealthPress. He’s navigated tricky markets like we’re seeing today, and specializes in hedged strategies, which is exactly what you’ll get with Money Flows Elite.
The service tracks which stocks institutional money is flowing in and out of over the first two trading days of every month. Jeff then issues NINE trade ideas — usually SIX long and THREE short trades — on the third trading day of every month.
This happens every single month… and he tracks and updates his members at least once a week, closing the positions on the final trading day of each month.
But like I said, you’ll get more details in the coming days, along with credentials to access his members’ area on WealthPress.com. I’m confident you’ll find plenty of value in the education and trading ideas Jeff delivers.
In today’s video, I’m breaking down next week’s Fed meeting, and talking about the other challenges on the horizon.
This week’s lackluster GDP reading is a problem for everyone involved at the central bank.
As supply chain woes accelerate, we are now facing a potential contraction in the first quarter if the logjam is not addressed.
The problem – as I’ve said for months – is that market incentives have distorted traffic at the ports, and the ongoing 40-year decay of U.S. supply chains because of outsourcing have created impossible conditions.
In the following video, I’m breaking down the supply chain woes that continue to accelerate across this economy.
At some point, the stocks won’t be able to climb anymore and investors are going to take a lot of profits off the table.
Then, there are the oil markets – and I’m breaking those worries down.
Watch the video if you’re serious about making money next week.
The Inflation Trade Heats Up
In March 2021, Federal Reserve Chair Jerome Powell said that the United States didn’t need to worry about inflation. Notice the date at the top.
Six months later, the tune is different. This headline is from Marketwatch this morning…
Inflation isn’t slowing down.
So what do we do now that the Fed has admitted what we already knew?
There are three primary ways to trade inflation.
First is naturally the energy space.
Oil producing companies with strong balance sheets and low levels of debt that own lots of crude. They’ll see a big push in their share price thanks to rising crude.
The Fed is expected to tackle tapering its balance sheet as soon as next month.
I’ve talked about the community banking space over the last few months. You can buy banks that are trading under a price-to-tangible book (P/TBV) of 1.
Then, you just wait.
Finally, you can combine basic materials producers (palladium, platinum, and silver) with emerging markets. I’m warming up to the metals producers that have cheap buyout metrics and low PE ratios.
That seems like the next move for institutional capital looking for a way to manage their cash in the months ahead.
Positions in Play
We’re still holding onto ICICI Bank (NASDAQ:IBN) and Skechers (NASDAQ:SKX). I offered my insights in the video, and I’m expecting these stocks to keep moving higher in the weeks ahead thanks to strong institutional inflows.
Recently, we’ve added Brink’s Company (NYSE:BCO) as a play. The stock is off again today, and we’re looking for a positive reversal. Ahead of the holiday season, we’re facing a lot of Americans sitting on a lot of cash.
Of course, we’re eyeing BCO stock and expecting a strong forecast when the company reports earnings next week. I’ll be back with more insight into that trade as we progress.
Finally, we had some swings with American Axle (NASDAQ:AXL).
If you haven’t sold your November 19, 2021 $9.00 call in American Axle (AXL) (AXL211119C00009000) do so at the best price possible.
Currently, the bid-ask spread is between $1.45 and $1.60.
A trade at the $1.50 range would generate about a 50% return. We’ll take action today.
We’re still holding the stock, and will exit on Monday if it trails lower.
In the following video, I’m talking about the latest challenges to the supply chain.
Listen, I do my best to leave politics out of market commentary. It doesn’t matter to me who is in charge. All that matters is that we can adjust accordingly. What’s happening in the supply chain will not be solved by administrative action. The only cure to supply chain woes today is time.
If you want to profit from this trend, I suggest you watch this video.
Earnings Season Kicks Off
Overall, it was a solid start to the earnings calendar from JPMorgan Chase, Citigroup, and Goldman Sachs.
But we have a lot of work to do before we get excited about the momentum rip that we witnessed on Thursday and Friday. It’s good to see that a lot of money is coming off the sidelines.
Right now, just 45% of stocks are trading under their 50-day moving average. I can’t stress what a positive development this is for mid-cap and small-cap stocks that traded sideways for months.
But a lot of big names are starting to face enormous pressures. I’m talking about stocks like AT&T, Intel Corporation, and United Airlines.
Banks aren’t facing any supply chain issues right now. But these three companies certainly do.
AT&T just laid out a huge promotion for iPhone 13s, and now there may be a shortage of those items.
Intel is at the center of a semiconductor crunch.
And United – well – they face pilot and staff shortages at a time that fuel costs are surging.
Let’s not have any illusions about what we’re facing in the future. We’re going to have supply chain, fuel, and inflationary pressures.
Is it the 1970s all over again? I don’t know. I wasn’t there.
But this does feel a bit more like 2006 right now than at any point.
And I do want to play as much defense as I can in the weeks ahead.
It has been a quiet week for trading, and the reasons are pretty obvious.
If you saw Tuesday’s sharp rise in volatility and listened to me talk about negative momentum on Thursday, you know I’m going to manage my risk and hold cash.
I know there is a deep desire to actively trade, but putting September behind us was important.
Now comes the real storm.
Yesterday, multiple global freight shipping companies announced that the international supply chains are under extreme duress. I’m serious when I say that people should buy their Christmas presents now and get paper supplies by mid-month.
Freight costs have gone up seven-fold from China to the United States on some lines. Costco is renting its own ships. Nike and McCormick – despite high demand – can’t get products across the seas.
We’re going to take advantage of Atlas Air Worldwide (AAWW) on Monday. I don’t want to enter a position and hold it over the weekend after the recent downturns to start the week.
We’re also going to be moving on Skechers (SKX), which looks like the breakdown is going to come to an end very soon.
I discuss this and more in my video below. I also offer an update on the current portfolio and how we plan to start deploying cash.
After that nasty downturn in momentum last Friday, we had to take a few companies off the board. But we’re primed for two new trades (including the bonus trade that I laid out earlier today).
As I noted, Evergrande in China lurks as a very ugly domino in the global economy. My concern is that there will not be a structural solution, and we’ll continue to see Band-Aids applied.
It doesn’t instill much confidence that a company that makes $5 billion a year in profits has $300 billion in liabilities. That latter figure is 2% of China’s GDP.
I’ve heard some people say that it won’t spread to the U.S. I don’t agree with this assessment fully. Chinese citizens invest in a lot of real estate in places like Northern California and New York. Any run on capital due to falling prices in China would impact larger U.S. markets.
I have learned from multiple major events to ignore the people in charge at the onset. The head of the European Central Bank said that Europe has very little exposure. I openly laughed at this interview.
As I said this week, I’m watching Australia. If we do experience any serious macroeconomic problems, it will start there. The commodity space has seen some insane moves over the last year, and it appears that the combination of supply chain shocks and labor shortages will persist.
The reason why I didn’t move on shorting the nation was because of the rebound in commodity prices on Tuesday.
So, we have to be patient.
My expectation is that the market will continue to experience a ladder pattern during the week. Some selloffs on Monday, gains for the next three days, and then a Friday downturn.
We have a lot of work to do.
The good news is that momentum remains very strong in the supply chains. Our PSTI position continues to run, and I will use any selloffs moving forward to recommend purchases in global shipping container companies.
The supply chain crunch we are about to experience (get your toilet paper and holiday gifts right now) is going to be as significant as what we saw in 2020, if not more significant.
It’s Quadruple Witching Day, and I’m breaking down what this means and how it impacts your money in the video below.
Listen, things are going to be choppy today. This is one of the most volatile days in the market all year. So, we maintain our discipline and we build on cash to ensure we can deploy it next week.
I’ve been quite happy with our recent big gains, particularly in Cameco Corporation (CCJ). We walked away with gains north of 100% thanks to the wave of speculation around uranium.
And we took those gains and put the money into the Sprott Physical Uranium Trust (SRUUF). We already have gains there. Shares are off a tad this morning, but we did make some nice gains from calling the bottom around $12.50 per share. I’m confident that this trust will hit $20 if uranium prices continue to climb.
I’m going to keep things simple today. I want you to watch the video. In there, I talk about every stock and options trade we have. It’s really important that you listen to this insight because we’re going to be VERY active over the next two weeks of September.
I’m also looking at new trades for Tuesday morning as I expect all this week’s volatility to calm down and create some special trades.
With S&P 500 momentum volume moving positive again today, we need to actively manage our portfolio.
You’ll notice that it was quiet this week.
With great uncertainty in the market and inflation numbers hitting nosebleed levels, it’s unclear which way the money wants to flow.
Six banks issued dire warnings around the market this week, and the talking heads are screaming about blood in the water.
I’m being cautious until Monday. I want to see where futures start next week before making any sudden moves.
With that in mind, we have a number of winning positions, and our focus on reversion momentum in these choppy conditions is paying off.
Let’s take a look at the portfolio and recent moves.
We exited ZNGA this week when it hit its trailing stop of $8.50. We made a gain on the stock, and we had two nice legs on our options trades. We’ll be ready to deploy capital next week.
Gaming & Leisure Properties (GLPI)
Rival VICI Properties engaged in a stock issuance to fund a new project, and pulled the rest of the sector down with it. This is extremely frustrating. The good news is that the stock has moved into oversold territory, and now we look for investors to scoop it up on the cheap. We will hold this position. I expect it to claw back to the $50 range where the 200-day moving average sits.
Levi Strauss (LEVI)
This is a legacy trade from our original portfolio, and the company can’t seem to catch a break. The big, negative news around the huge jump in supply chain inflation isn’t positive news right now. We will give this one more week to rebound. Otherwise, we’ll have to cut the dead weight.
PAM Transport (PTSI)
PTSI continues to chug along in positive momentum conditions. Shares opened north of $40 today. Based on the recent move up to $40.42, your new trailing stop is $37.59. It’s very important to follow these rules. That will ensure at least a 12.5% gain from our original entry price.
TrueCar moved very close to our trailing 7% trailing stop of $4.00, but it has since bounced back and is now tracking north of $4.27. Our option is flat right now at $0.40, but the momentum is surging higher for this stock. I think that $5.00 is still in the cards. If you’re just buying it, be sure to keep that trailing stop in place. Be patient.
The volatile diagnostic company might be weighing on our patients, but it’s still in play. There’s a move to $12.50 coming, and we’ll be happy to take our profits if we get above $11.75.
ARES Management (ARES)
The stock has moved out of overbought conditions into oversold conditions. Morgan Stanley just upgraded the financial power player to $90, but would be a nice gain. I’m looking for institutional capital to show up and push this higher.
Cameco Corporation (CCJ)
The uranium player has been an emotional rollercoaster over the last 48 hours, but a 4.2% move this morning has the stock up to around $24 per share. Can it go higher? It could break to $30 by the end of the month if this surge in uranium prices continues. As I explained in the video, Sprott Management is buying up supply, and CCJ is going to be the big winner.
We’ve bought the stock and taken a tight trailing stop. We also bought the Oct. 15, 2021 $22 call for under $1.50.
This afternoon, I recommended that you take 50% of the position off the table. By securing more than 100% gain on your first half of the trade, you’ve locked in a free trade. In fact, since the return is likely higher than 100%, you’ve locked in a guaranteed win. But we will manage this actively. If the stock pulls back, we can take the rest of the gain, but given this incredible momentum, I think there’s plenty of room to run.
Terminix Holdings (TMX)
Speaking of gains, TMX is running as well. After that double upgrade by Bank of America, this continues to perform. I recommended TMX when it was trading around $42.30. It’s now north of $45.70. That’s an 8% move in a week, and that’s a great reversion momentum trade.
Now, we also tagged that Feb. 22, 2022 $40 call at $4.50 or better. The Bid-Ask spread puts the contract around $7.00. That’s about 55% on a contract that hasn’t seen a lot of volume. If you got into this trade, you’ll want to manage this closely. I’ll monitor it as well. It may be time to take profits off the table if the stock hits $46.00 and move onto the next trade with money in your pocket.