When we spoke on Tuesday, I told you how to profit from the Corona Correction with a long-term play on China’s massive Web sector.
I noted that with the market in a correction, now is a good time to begin building a position in the EMQQ The Emerging Markets Internet & Ecommerce ETF (EMQQ).
In other words, I’m suggesting that investors turn the market’s weakness to their advantage by investing in the massive Web sector covering emerging economies.
Today, I want to address some of the concerns investors may have about how to deal with the overall market.
It’s easy to see why. With the global coronavirus panic hitting investments across the board, investors clearly need a set of tools to help them deal with this new volatility.
Last Monday, the market’s circuit breaker kicked in to halt trading for the first time since 1997. The very next day the S&P 500 rocked it with a roughly 5% gain.
And then on Wednesday, we entered a bear market, which is a 20% decline from the previous high.
An Emotion-Driven Market
Now then, if ever there was a time to take solace from macro factors, this is it.
The Federal Reserve has already shown its commitment to keeping the economy moving forward with interest rate cuts if that’s what it takes.
Irony abounds. If you just glanced at all the panic-driven headlines about the coronavirus, you’d never even know that the jobs market is on fire.
Simply stated, the most recent jobs report from the U.S. Labor Department absolutely crushed forecasts. Economists had expected to see nonfarm payrolls rise by 175,000 in February.
Instead, they came in at 273,000. The figure beat consensus estimates by a stunning 56%. Not only that, but estimates for January and February have been revised upward by a total of 243,000 jobs.
Consumer confidence remains strong. But with bad news about the coronavirus spreading faster than the disease itself, you can understand why it has fallen back a bit.
In January, a poll by Rasmussen Reports showed economic optimism had hit a five-year high. It backed off slightly, like less than 4%, as measured in the middle of last month.
What we’re facing is something out of our control – a news-driven market. That’s why you are seeing the markets move on headlines.
For instance, last weekend, we got news that much of Italy was under quarantine.
With that vortex of coverage going on, it’s important to look at things in relative terms. The coronavirus is certainly a problem, but here in the U.S., this year’s seasonal flu has killed more than 18,000 people. That’s roughly 900 times more than the number of Americans who have succumbed to the coronavirus.
And still, we have roughly 1,000 coronavirus cases in the U.S., the world’s leading economy and home to 330 million people.
So, if you’re feeling a bit confused and frustrated right now, you’re in good company. The pros who should know better find themselves constantly reacting to the headlines.
What we need in a case like this a set of tried-and-true tools that can turn choppy markets to our advantage.
I use these all the time for members of my monthly newsletter, the Nova-X Report. It’s a key reason why we can rack up triple-digit profits when investors are busy spinning their wheels. Take a look:
Choppy Market Tool No. 1: The Cowboy Split
I’m shocked more professional investors don’t know about this powerful moneymaking tool. But it’s one we use here all the time.
Simply stated, the Cowboy Split is a staggered-entry system. You take a position in a stock at market – and then enter a “lowball limit” order to buy more if a discount comes your way.
In general, I recommend employing a 15% to 20% discount from your entry price as a second buy point. Here’s how it works…
You acquire 50% of your intended stake of XYZ Tech Corp. at a price of $50. In this case, should the market trigger your “lowball limit” order, you would automatically buy a second 50% stake at $40 a share, for an average price of $45.
Now assume XYZ rallies all the way to $60. You would then have a 16.6% appreciation on your original shares. But it’s that second stake that really juices your profits.
See, that second half’s gains are double those of your first buy. This way, you end up with overall gains of 25%, or roughly 50% more than had you just bought your full stake at $50.
But if you want to see this tool in action on some real trades and even receive specific recommendations on how to make money off of it yourself, you can click here to sign up to receive the Nova-X Report.
Choppy Market Tool No. 2: The Free Trade
Whenever a stock doubles in value, take a free trade and lock in gains. That’s a sell order for half of your stake. Doing so means you have all your original capital back and are then playing on the house’s money.
It’s a powerful way to protect profits against a choppy market with two side benefits. First, you can end up owning a suite of stocks for free. And second, you stay in the position to reap any new upside.
Let me give you a case of just what I’m talking about. Last year at my monthly newsletter, the Nova-X Report, we took six free trades last year alone.
So, while many investors were struggling, my members had a chance to make big money by employing this and the other tools we’re talking about here.
Choppy Market Tool No. 3: The Autopilot Profit System
Whenever possible, set yourself up so that you exit a position with specific gains no matter what happens.
That’s where the “Autopilot Profit System” comes in handy. It’s a unique way of protecting profits with a combination of taking gains and using trailing stops.
It’s a great way to take some money off the table if you want to protect gains before a free trade would kick in. The tool works like this…
Let’s say you sold a portion of XYZ Tech when it was up 30%. Now, you can afford to see if the stock still has more upside while at the same time protecting your profits against any reversal.
In this case, you could set your stop at your original entry point and walk away with combined gains of 15%. Or you can set the trailing stop above your entry price to lock in more money.
The beauty of the system is that you set up your minimum profit figure in advance. After that, there’s no need to worry about what happens, because the Autopilot System is protecting your hard-won gains.
I use this all the time when my subscribers get a free trade. We often set a 50% trailing stop on the second half so we walk away with combined gains of 75% no matter what happens.
You can see that by using our Choppy Market Tools you can keep on investing in winning tech stocks — even in this rocky market – and know that we’re prepared for anything the world throws at us.
And you won’t drive yourself nuts on this Road to Wealth that is paved with tech.
Cheers and good investing,
Michael A. Robinson