How We Traded July’s Nasdaq Pullback for a 69% Gain

Trading against major trends can hand you great profits if you when to get in and out… [Jeff Clark's Market Minute]( Managing Editor’s Note: Today, we’re handing the reins over to colleague Larry Benedict – a market wizard and legendary hedge fund manager. The tech-heavy Nasdaq is booming, but there can be pullbacks that you can profit from if you can see them coming… Larry shares how he does it to secure great gains… Here’s Larry… --------------------------------------------------------------- How We Traded July’s Nasdaq Pullback for a 69% Gain By Larry Benedict, editor, Trading With Larry Benedict The Invesco QQQ Trust Series 1 (QQQ) bottomed out in late October last year. Since then, it has been on a tear… Potential rate cuts, Big Tech profits, and the AI frenzy helped push QQQ to a 47% gain earlier this month. But despite QQQ’s big rally, there have been strong pullbacks along the way. Two of those pullbacks generated big profits for my One Ticker Trader subscribers… A couple of months ago, we traded the first of QQQ’s major retracements for an 89% gain. Today, I want to share how we profited from QQQ’s current retracement. We were slightly early with the trade. Yet we exited last week for a blended 69.3% gain. So let’s check out how we did it… Recommended Link [Warren Buffett, Jeff Bezos, Michael Bloomberg, & 48 Members of Congress Are Buying ONE Sector…]( [image]( Why are Warren Buffett, Jeff Bezos, Michael Bloomberg, “The Walmart Family”, Bill Gates, and 48 members of Congress shifting their stocks in a frenzy? [And why are they all piling into ONE unique corner of the market…]( This corner of the market is NOT artificial intelligence… Crypto… gold… energy… bonds… dividends… options strategies… or any other familiar sector or strategy.  Instead… - [It’s a sector that the U.S. Gov’t spends 6-TIMES more on, than our own ENTIRE military defense budget.]( - It’s a sector that is expected to grow another $10 trillion… - And save an estimated 14 million lives per year, in the process. The last time we saw the world’s wealthiest investors move their cash into this corner of the market… Stocks exploded 2,020%… 5,609%… Even as high as 8,437% in just ONE year. Now, it’s all happening again. [Click here for the details.]( -- An Overheated Nasdaq In the chart below, QQQ retraced from March into April (when we generated our 89% profit). But buying momentum returned, as shown by the Relative Strength Index (RSI) in the bottom half of the chart. And QQQ resumed its longer-term rally… Invesco QQQ Trust Series 1 (QQQ) Source: eSignal [(Click here to expand image)]( QQQ’s rally coincided with the RSI bullishly breaking up through resistance (green line) and into the upper half of its range. Plus, the 10-day moving average (MA, red line) accelerated above the 50-day MA (blue line). But in June, we saw signs that QQQ was overheating. The RSI made an inverse “V” at “A” and then tracked lower. This saw QQQ pull back briefly before a rising RSI pushed it higher again. The RSI jumped well into overbought territory once more. And it looked likely to pull back again. So we entered a short position on July 3 by buying a put option. (A put option increases in value when the underlying stock falls.) But it wasn’t just the QQQ chart that triggered the trade. Heavyweight stocks like Nvidia and Apple had run into solid resistance and looked vulnerable to a pullback. At the time, we saw similar patterns forming in Amazon, Meta, Netflix, and Microsoft too… Plus, the much-anticipated rate cuts had been continually pushed back due to persistent inflation and strong economic data. Yet even with all these factors in play, we entered our trade a little too early… Instead of turning lower, the RSI recovered and rallied, sending QQQ higher too. Then the RSI formed a lower high at “B” (orange line). When the RSI tracks lower like this (while QQQ rallies), we know that it will eventually pull the stock price lower too. And that’s what we saw… Take another look: Invesco QQQ Trust Series 1 (QQQ) Source: eSignal [(Click here to expand image)]( The RSI fell back toward support (green line). And it pulled QQQ down with it too. That put our position back into the green. Our position was in good profit when the RSI tested support. So we closed out half our position on July 18 for a 63.5% gain. We left half our position open to capture any further move down. That turned out to be the right call. Our position went further into profit. But momentum appeared to be rebuilding, so we closed out the remainder of our position the following day for a 75% gain. Together, that resulted in a blended 69.3% gain in a little over two weeks. Free Trading Resources Have you checked out Jeff's free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career – at zero cost to you. Just [click here]( to check it out. As you can see, options can magnify returns compared to just trading shares. Yet options have a finite life. Time decay always eats away at an option’s value. If the planned move doesn’t come off, and you hold your option to expiration, your position can expire worthless. But that’s the risk you take to generate these outsized gains. And as this trade shows, options can help you trade reversals against a major trend for handy profits… even if you don’t always time your entry exactly right. Happy trading, Larry Benedict Editor, Trading With Larry Benedict [Jeff Clark's Market Minute]( Jeff Clark Trader 55 NE 5th Avenue, Delray Beach, FL 33483 [www.jeffclarktrader.com]( To ensure our emails continue reaching your inbox, please [add our email address]( to your address book. This editorial email containing advertisements was sent to {EMAIL} because you subscribed to this service. To stop receiving these emails, click [here](. Jeff Clark Trader welcomes your feedback and questions. But please note: The law prohibits us from giving personalized advice. To contact Customer Service, call toll free Domestic/International: 1-800-752-0820, Mon–Fri, 9am–7pm ET, or email us [here](mailto:contactus@jeffclarktrader.com). © 2024 Omnia Research, LLC. All rights reserved. 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