My colleague Keith Fitz-Gerald told you yesterday how we could see a 3% to 5% market drop as more coronavirus news comes out. The Dow's lost about 1.8% since Friday.
Usually this week we'd be diving into earnings-related profits - it's one of the biggest earnings weeks of the quarter.
But that's getting overshadowed by virus-related volatility.
When markets have big down days - when the Dow drops 500 points and the S&P 500 drops 50, with reason to keep going - I think two things: 1) Where's safety? and 2) How do I trade it?
If you know how to answer both of those questions, you don't have to sweat market drops. In fact, you just use them to make money.
And when you have a chart like this one, it gets even easier...[mmpazkzone name="in-story" network="9794" site="307044" id="137008" type="4"]
The Positive Plays Ahead
Anyone who's taken my Cash Course knows from Part 2 that I like to look at only the top 2% of stocks when I trade. They're the most liquid stocks and ETFs on the market, with the most liquid options.
That leaves me with 575 stocks I look to for opportunity. I pulled a market overview on these to see what is actually moving higher right now, with coronavirus fears front and center.
About 10% of them - a total of 63 stocks - are positive:
Let's take a closer look at the positives...
Looking at some specific companies, one that jumps out is Clorox Co. (NYSE: CLX).
This is a stock moving higher in this specific scenario because with news of the coronavirus, people are immediately thinking bleach will help keep things clean, keep germs away, and help them potentially not contract the virus. It's certainly a preventative measure.
Clorox has actually been doing well since December, moving up from its bottom of $148 to $160, where it's sitting now. That's a big, big move, and it's likely to go higher. It really broke above its high over the past 30 days, starting in the middle of the month as the virus began to be reported outside of local areas.
AbbVie Inc. (NYSE: ABBV) is up nearly 1%. This is a bullish environment for a biopharma company like AbbVie.
I've also got my eye on GLD because there's safety in gold during times of uncertainty. In fact, this week it has actually popped above the highs that were made at the beginning of the year.
Now, a surprising one is United States Natural Gas Fund (NYSEArca: UNG), or natural gas. I've noticed an interesting pattern between the stock market falling really hard and natural gas being a hedge.
I'm long gold, but I'm also long natural gas. So UNG, which is the ETF for natural gas, is obviously going to move higher with this pattern. The simple reason for gas to go higher is when you have a global event such as the coronavirus that will cause the stock market to move precipitously lower.
So these are the stocks to play to the higher side as the market falls.
And since you know I love options, the other way to profit is to look for a low-risk option trade.
And that's when you'll want to check out the VXX, the ETF that tracks the movement of the Volatility Index (VIX):
As you can see, the VXX has gone from 13 to over 15 - a big jump in only two days.
As an options trader, a move like this tells me that I'm going to be looking at in-the-money options - ones giving me a good chance to make money.
Otherwise, I'll look at credit or debit spreads to try to hedge off that volatility risk.
Later this week, I'll be back to talk about how you can discover some of the lowest-risk, highest-reward trades in the market.
My goal with this and all my updates is to keep the profits coming in 2020.
In fact, last year, just one tool garnered over $122,000 in potential profits.
I want to show you all how you can cash in up to $150,000 in just one year.
In order to do that, I need to focus on where the opportunity is - no matter what global news is doing to the markets.
That's why I look for patterns - patterns no one else sees - that can point me to profits.
And when I find one that repeats over and over, I set it up to potentially double my money on it.
You can, too - keep reading here to find out how you can book $150,000 in profits in 2020. I'll show you...
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About the Author
Tom Gentile, options trading specialist for Money Map Press, is widely known as America's No. 1 Pattern Trader thanks to his nearly 30 years of experience spotting lucrative patterns in options trading. Tom has taught over 300,000 traders his option trading secrets in a variety of settings, including seminars and workshops. He's also a bestselling author of eight books and training courses.