{"id":91927,"date":"2016-06-24T06:05:21","date_gmt":"2016-06-24T10:05:21","guid":{"rendered":"http:\/\/countingpips.com\/?p=91927"},"modified":"2016-06-24T06:05:21","modified_gmt":"2016-06-24T10:05:21","slug":"turn-fear-into-profit-with-this-monster-trade","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2016\/06\/turn-fear-into-profit-with-this-monster-trade\/","title":{"rendered":"Turn Fear Into Profit With This Monster Trade"},"content":{"rendered":"
June 24, 2016<\/div>
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By WallStreetDaily.com<\/u><\/a> \"Turn<\/p>\n

Is the sky falling?<\/p>\n

At the time of this writing, it most certainly is not.<\/p>\n

Yet with all the fear-based, hot-take reporting splashed all over TV screens and newspaper headlines, it\u2019s not hard to imagine why someone might think otherwise.<\/p>\n

Between the European Union referendum vote, the Federal Reserve meeting in July, and the impending U.S. presidential elections, there\u2019s a lot on people\u2019s minds \u2013 mine included.<\/p>\n

But while things might not be so peachy, they\u2019re not always as bad as they seem, either.<\/p>

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Long-term investors cringe at volatility, but short-term traders are having a field day with it.<\/p>\n

And as I noted in last week\u2019s article, fear is causing a lot of disruption in the financial markets.<\/p>\n

Today, I\u2019m going to dive into one of the strongest fear plays in the market right now\u2026<\/p>\n

Baked in the Cake<\/h2>\n

Before we get into the trade, let\u2019s talk a little bit more about chart analysis.<\/p>\n

Assuming all things being equal, all the fundamental data about a specific stock \u2013 sales figures, debt, valuation ratios, basically all the public financial information available on a company \u2013 is already worked into the stock price.<\/p>\n

Taking this same approach when looking at a stock chart, it\u2019s easier to focus solely on the price action.<\/p>\n

Or rather, how the market interacts with what it knows \u2013 and what it thinks<\/em> it knows \u2013 about a stock.<\/p>\n

And short-term traders are most likely going to trade based on a stock\u2019s momentum.<\/p>\n

To do this successfully, a trader needs to identify the trend as well as both its support and resistance levels.<\/p>\n

If a stock is making higher highs as well as higher lows, we say that the shares are in an uptrend.<\/p>\n

The inverse holds true, as well: If a stock is making lower highs and lower lows, it\u2019s in a downtrend.<\/p>\n

Seems simple enough, right?<\/p>\n

Additionally, a stock\u2019s support acts as a price floor, while resistance works like a price ceiling. These are the parameters between which the battle between the bulls and the bears plays out.<\/p>\n

As a stock rises or falls on a chart, it\u2019s always pushing these boundaries, either furthering the current trend or reversing into a new trend.<\/p>\n

All That Glitters Is Gold<\/h2>\n

Gold is one of my favorite momentum plays, due to its strong negative correlation to stocks. When stocks fall on heavy volatility, investors pile into gold. But when stocks recover, gold gets dumped. Hard.<\/p>\n

And as you know, the financial markets never go up or down in a straight line. They move, rather, in a wave-like motion.<\/p>\n

So, if an investor is looking to trade gold upside during a downtrend in stocks, they\u2019ll want to strike when stocks are on the rise. More specifically, when gold pulls back to a near-term support level.<\/p>\n

And fortunately, one such opportunity has just arrived.<\/p>\n

Don\u2019t Fear the Trade, Trade the Fear<\/h2>\n

The VanEck Vectors Junior Gold Miners ETF <\/strong>(GDXJ<\/a>) tracks some of the strongest junior miners in the world.<\/p>\n

It\u2019s one of the more volatile plays on gold, but it captures more opportunity from fear mongering than a physically backed gold fund like the SPDR Gold Shares ETF<\/strong> (GLD<\/a>). And it can produce big gains in short order without breaking the bank.<\/p>\n

The fund broke through key horizontal resistance at $39.20 in early June and just rallied to a fresh 52-week high, which corresponds to the fund\u2019s April high.<\/p>\n

The bears have, unsuccessfully, tried to force GDXJ below this support for the last two weeks.<\/p>\n

From a trader\u2019s perspective, when previous resistance becomes strong support, it\u2019s a very attractive entry point for the bulls.<\/p>\n

And with the Federal Reserve\u2019s July meeting looming large, gold may become an even bigger target for nervous investors.<\/p>\n

Simply put, now is the perfect time to trade gold ahead of what may turn out to be a rough road for stocks.<\/p>\n

You could hold GDXJ through the Fed meeting next month for a quick \u201cfear\u201d gain, or hold on a bit longer to capture volatility upside throughout the summer.<\/p>\n

Either way, the time to trade this trend is now.<\/p>\n

On the hunt,<\/p>\n

Jonathan Rodriguez<\/p>\n

The post Turn Fear Into Profit With This Monster Trade<\/a> appeared first on Wall Street Daily<\/a>.<\/p>\n

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By WallStreetDaily.com Is the sky falling? At the time of this writing, it most certainly is not. Yet with all the fear-based, hot-take reporting splashed all over TV screens and newspaper headlines, it\u2019s not hard to imagine why someone might think otherwise. Between the European Union referendum vote, the Federal Reserve meeting in July, and […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-91927","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/91927","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=91927"}],"version-history":[{"count":2,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/91927\/revisions"}],"predecessor-version":[{"id":91942,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/91927\/revisions\/91942"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=91927"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=91927"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=91927"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}