On the weekend I addressed thousands of people at a London seminar and I invited one member of the audience to place two live trades on stage with me to demonstrate the power of what I teach. One of the trades I placed was on COST (Costco). I bought a put option, then I set-up a second trade with NVDA (Nvidia). This time it was a call option. Both of these trades have worked out exceptionally well. If you had placed these two trades you would have made $1,190 in one day. I was very proud of that effort. I also gave that lucky volunteer the cash for the trades!

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The markets

The Nasdaq was the stand-out index last night, up 0.67%. The S&P 500 was flat as were the industrials. Transports were down a pinch at 0.22% and the Russell 2000 showed some weakness, down 0.43%. It is just below that significant support level of 140.

The sectors

Technology was the strongest sector, up 0.73%. That of course makes sense as the Nasdaq, which is technology-based, was up the most of all the indexes. The weakest sector was biotech, down 0.81%.

Winning retail trades

The retail sector has been very weak. Looking at the XRT (retail-based) index, and you will note a downward trend. Yesterday I said to watch retail. Overnight it moved down 2.39%. I have demonstrated there were great trades there! The elite students did well on Costco.

I will recap why I choose that stock. First the overall sector, retail, is in a downtrend. That is the big picture, which we always assess first. Next, I found a stock that was already showing relative weakness, it was already moving down, therefore when the sector moves down that stock will fall the fastest, and usually the hardest. This is exactly what happened with Costco. I had seen the MACD turn down, I noticed a very nice bear flat on the daily chart. It was fantastic to make that sort of money in just one day. Retail is weak at the moment. More and more stores are closing down, as online shopping gets stronger. You can see the flow of money out of retail and that is how we made exceptional money on that trade.

I have 5 other bearish trades in retail. It has a nice ledge pattern, which is bearish. I showed this to my elite students yesterday, warning that it could break down. The MACD was pointing down and again it moved down overnight. It went down 5.26%. Another great call and we made great money!

I will continue to focus on retail to the downside. I will still hold my bearish positions, but I will lock in profit. I am a big advocate of risk management. Take risk off the table when you can.

The Nasdaq – watch the 21 EMA

I will keep my eyes on the Nasdaq. It moved up last night. If you look at it on a 21-EMA (Exponential Moving Average), you will see that it is right up against the 21 EMA. If it can break above that tonight then we could expect the Nasdaq and technology to have a run higher. I will watch the Nasdaq’s 21 EMA closely on a daily chart to see if it breaks to all-time highs.