Suppose the old midterm pattern works for a twentieth time. The S&P 500 Index gains another 15% over the following year. What stocks will you want to own?
That’s a legitimate question. With the competition for capital between the hyperscalers building the AI economy of the future and the government trying to roll over $40 trillion in past, some would say failed, promises… your money is in the crosshairs.
Big Tech and Big Government both need it!
The reason appears every day in the market we’re trading now.
The S&P 500 has gained roughly 14% this year, but the average stock hasn’t come close. Reuters calculates that the median member has gained about 4%. Sandisk (SNDK) and Micron Technology (MU) have more than tripled. Nvidia (NVDA), Apple (AAPL), Micron and Advanced Micro Devices (AMD) have done an outsized share of the work pulling the index higher.
An index averages the racehorses with the milk cows.
Despite bouts of volatility, economic uncertainty and endless debate over whether the AI boom is getting carried away, stocks have continued to find opportunities to climb. (Source: Carson Investment Research)
Options let us concentrate on the racehorse.
The historical examples in our promotion show what leverage can do when the underlying stock makes an unusually large move during the life of an option. Our retrospective work identified modeled trades in Tesla (TSLA), Deckers (DECK) and Fair Isaac (FICO) that would have produced gains measured in four digits.
Let’s be precise about that language. Those are retrospective examples produced by applying the strategy to historical market data. They are not promises that the next trade will behave anything like the previous ones. An option can produce a spectacular percentage gain because a relatively small premium controls exposure to a much larger position. The same leverage can reduce the premium to zero.
That’s leverage doing what leverage has always done: magnifying the consequence of being right and accelerating the punishment for being wrong. It doesn’t remove risk. It concentrates it.
Plenty of traders appear willing to make that bargain.
Reuters recently reported that the New York Stock Exchange is preparing to launch a new breed of binary-return options on Apple, Nvidia, Tesla, the State Street SPDR S&P 500 ETF (SPY) and other securities.
The NYSE is allowing you to bet on whether a specific market outcome happens, collect a predetermined payout if you’re right and potentially walk away with nothing if you’re wrong. (Source: Shutterstock)
NYSE executives cited the extraordinary growth of U.S. options trading and growing demand for instruments that allow investors to express specific views around market events. The exchange is also seeking approval for contracts tied directly to company metrics such as revenue, earnings and vehicle production.
Wall Street keeps inventing sharper knives because investors keep asking for them.
There is another wrinkle. The more leverage and options positioning accumulate around the same names, the more market mechanics can reinforce the move in either direction. Dealer hedging can add buying to rising markets and selling to falling ones. What begins as speculation on fundamentals can become a feedback loop of its own.
We use ordinary listed options differently. Andrew starts with the company and the catalyst. Our system looks for unusual market activity. Then we decide whether the price, expiration date and expected move offer a trade worth taking.
The November 3 election gives us a catalyst everyone can see. The opportunities underneath it are less obvious.
The AI boom has already created enormous dispersion between winners and losers. Chipmakers have surged while many industrial, consumer and real-estate stocks have fallen. Power companies, cooling suppliers and electrical-equipment manufacturers have joined a technology trade that began with graphics processing units (GPUs).
Reuters reported in September that power and cooling suppliers are now participating in what has become a trillion-dollar data-center construction boom.
A 15% post-midterm rise in the S&P 500 would be welcome. A company standing directly in front of a bottleneck can move much farther. How do we find the right ones… we ourselves are relying on a patented AI forecasting tool that helps us identify stocks before they move up… or down.
~ Addison
P.S. Early next week, one of two things is going to happen. Republicans will retain control of Congress and the Trump mandate will kick into high gear for the remaining two years of his second term.
Or, the data proves out, and socialists move into positions to stall tax reform, impeach administration officials they don’t like and let TDS run wild through the mainstream press all over again.
Either way, it’s up to you to keep your own eyes on your money, right?
Take a look at this:
That’s a photo we just took of the actual patent for our AI-driven forecasting tool. It’s remarkably accurate. The AI tool sifts through millions of transactions in the open market simultaneously and gives us strong forward guidance on any stock we choose to run through the system.
It’s fantastic. And gives us insight into larger-than-life macro trends as well as granular price movements on individual stocks.
Why does the patent matter?
Well, the good news is you don’t have to forecast political winners or agree with the flaccid promises candidates make to get elected to find potential winners on Wall Street.
The patented tool also helped us assemble the exact historical patterns that will help you make and preserve your money before, during and after the midterm elections and the investment opportunities that will naturally flow from a political shift in Washington. Click here to see how you could put them to work in your portfolio.
