When Credit Suisse Tanked the Markets, Our Strategy Delivered a 35% Gain

[Trading With Larry Benedict]( When Credit Suisse Tanked the Markets, Our Strategy Delivered a 35% Gain By Larry Benedict, editor, Trading With Larry Benedict When markets are volatile, buy-and-hold investors can feel the pain… As soon as they get into a trending position, the stock turns around and bites them hard. However, by using our mean reversion strategy, we profit when a trend unravels and snaps back the other way. What’s more, we can apply this strategy in either direction. Today, I want to show how we used our strategy to profit from the SPDR Euro Stoxx 50 ETF (FEZ). It had been bid up way too far. While long investors were losing money, we generated a blended 35% gain for members of my options advisory, The Opportunistic Trader… Recommended Link Millionaire Trader Reveals: [The One-Trade Retirement Blueprint]( [image]( This retirement method is unlike anything you’ve ever seen. In short: it’s a way to trade one unique type of investment over and over again… and potentially make all the money you need to fund your retirement. We call it the “One-Trade Retirement Blueprint.” And it’s a dream come true for folks at or near retirement. [Get the details here – including the name of the ticker that makes this all possible.]( -- Looking for Diverging Patterns In the chart of FEZ below, you can see its huge rally that began in October last year. The Relative Strength Index (RSI) kicked things off. It made a double ‘V’ (red circle) and rose from oversold territory (lower grey dashed line). Then the 10-day Moving Average (MA, red line) crossed above the longer-term 50-day MA (blue line). And both started trending higher… SPDR Euro Stoxx 50 ETF (FEZ) [Image] Source: eSignal As you can see, though, the rally wasn’t all one-way traffic… FEZ made higher highs in November through December (upper orange line at ‘A’). But the RSI (lower orange line at ‘A’) showed that buying momentum had plateaued in overbought territory (upper grey dashed line). When buying momentum stalls like this, the rally will eventually peter out too… FEZ then started to retrace as the RSI tracked lower. Then in January/February this year, we saw this pattern repeat… FEZ and the RSI again diverged (orange lines at ‘B’). FEZ peaked on February 2 and then gradually drifted lower as the RSI trended down. FEZ had already rallied nearly 50% from its October low (to February high). And our signals looked bearish. So we entered a short position by buying a put option on FEZ on February 24. (Note that a put option should increase in value when a stock price falls.) As the chart shows, however, our position initially went against us. FEZ briefly counter-rallied over the following days. Take another look: SPDR Euro Stoxx 50 ETF (FEZ) [Image] Source: eSignal But the RSI continued to track lower. And FEZ soon rolled over and started to head down too… FEZ then gapped down as the Credit Suisse news broke. That sent a wave of fear through the markets. Credit Suisse bonds were trading at distressed levels, and credit default swaps in the banking sector went through the roof. This meant the European market’s fall was three times that of the U.S. market’s reaction. [The One Ticker Retirement Plan Over the Shoulder Demo Now Available]( Free Trading Resources Have you checked out Larry's free trading resources on his website? It contains a full trading glossary to help kickstart your trading career – at zero cost to you. Just [click here]( to check it out. However, we saw the prospect that the European Central Bank (ECB) would come in to bail out Credit Suisse – much like the Fed handled the Silicon Valley Bank fallout. So we decided to lock in a part of our profits by selling half our position on March 15 for a 42.1% gain. Although it was the Swiss National Bank (not the ECB) that handled the bailout, this proved to be the right call… As you can see, FEZ rallied higher the following day. The remaining half of our position was still in good profit, and we didn’t want to hand any more of our remaining profits back at that point. So we closed out the remainder of our position on March 17 for a 27.7% gain. Altogether, that averaged out to a handy 35% blended gain over three weeks. To be clear, we generated this level of return using options. Had we just shorted FEZ shares instead, our profits would have been lower. However, by choosing the right stock and strategy, traders can make money… no matter what direction the market takes. Regards, Larry Benedict Editor, Trading With Larry Benedict P.S. This past Saturday, I held a demo of my [“lightning trades”]( strategy… These trades typically occur in 24 hours or less. Yet even in that short window, we’ve been able to generate multiple 100% wins. In 2022, we did this 245 times. And so far in 2023, we’ve done it another 100 times. That’s why this is one of the [best income trading strategies]( I know of… We can profit even during volatile markets and bank collapses. I’m sharing a rerun of Saturday’s event until midnight tonight… So if you weren’t able to tune in, don’t wait. Simply [go right here]( to watch the replay. Reader Mailbag Where do you think the banking industry is headed from here? Send in your thoughts to feedback@opportunistictrader.com. IN CASE YOU MISSED IT… [Former Goldman Sachs Executive Confesses:]( “I used to expect a crash… here’s my new prediction…” In 2018, Nomi Prins predicted a crash in her bestselling book, Collusion. Today, she’s coming forward with a brand-new prediction. She says: “The world has changed. Over the last few months, I’ve come to realize we’re not facing a crash at all… but a new kind of crisis. If you don’t see it coming, you could be blindsided and left behind. But if you see what’s happening, you could use it to become richer than you ever thought possible.” [Click here to see what changed her mind and find out how to prepare.]( [image]( [The Opportunistic Trader]( The Opportunistic Trader 55 NE 5th Avenue, Delray Beach, FL 33483 [www.opportunistictrader.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](. The Opportunistic 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: 1-888-208-6550, Mon–Fri, 9am–5pm ET, or email us [here](mailto:feedback@opportunistictrader.com). © 2023 Omnia Research, LLC. All rights reserved. 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