Editor’s note: Today is President’s Day in the U.S. And in lieu of our normal edition of The Bleeding Edge, we’re sharing an insight from colleague and master trader Larry Benedict.
As Larry shares below, there are 32 days in the year where the largest one-day moves in equities usually take place. Savvy traders who understand this can use them to profit.
And if you enjoy Larry’s research, we invite you to join him this Wednesday at 8 p.m. ET to learn more about these “money shock” dates and how to use them to your advantage this year. Reserve your spot with one click right here.
There are 32 days in the year that matter to traders.
These are special days when it’s possible to get outsized returns on your money. That’s why I call these days “money shocks.”
And they exist even in bear markets.
In fact, I first noticed this pattern during extreme conditions… right as the 2008 great financial crisis was playing out.
Many of us remember how it went…
The housing bubble collapsed, and the financial sector was left holding the bag. That led to the collapse of Bear Stearns and Lehman Brothers… along with more than 500 other banks. The government stepped in to prop up Fannie Mae and Freddie Mac and “bail out” the big banks.
Put simply, it was a mess… And over 16 months, the markets fell roughly 50%.
But if you knew where to look, there were certain days when savvy traders could make serious money.
I was still working at my hedge fund, Banyan Capital, during that period. On one of these days, my firm made $4.2 million net profit. On another, we generated $6.1 million. On a third occasion, it was over $8 million.
Now, to achieve these returns, we were handling more money than the average trader has.
But there’s nothing to stop regular people from taking advantage of these opportunities too…
In fact, I’ve made over 70 trades on these “money shock” days in my current trading advisories… with a win rate over 80%.
So today, I’d like to explain how…
Most people tune out things like government data and statistics. By and large, it’s boring and technical.
And unless you have a particular reason you need to know a stat, few of us have reason to dig into the often clunky websites where they’re kept.
But for traders, it would be a huge mistake to ignore certain key numbers.
In fact, the 32 days I mentioned earlier refer to times when the government releases valuable pieces of information… like inflation data or interest rate changes.
Because those reports send market action up by as much as 20X.
Volume and volatility are critical components to trading. Increased volume and volatility = greater potential to make more money quickly.
And during these “shocks,” the federal government makes it even easier to generate incredible returns.
This is where I thrive.
In these kinds of moments, everyone thinks they have a genius prediction for where they expect the economy to go. So more people place their bets – often with undue risk – and send prices flying up and down.
Now, a lot of those same people lose money.
But when you know how to play it, you can make solid wins. We had an example just this month…
Playing the FOMC Announcement
On January 27, we entered a trade leading into a “money shock” event – the upcoming FOMC announcement just days away. In short, the market was waiting on tenterhooks to see how much the Fed was going to raise rates.
So we made a bet on the iShares 20 Plus Year Treasury Bond ETF (TLT). Bond yields were struggling to rise and had rejected the 3.7% level five times in a month.
But we saw the potential for a continued short-term TLT rally and knew that the Fed would only raise by 25 bps… less than many were anticipating.
That would give us another leg down in Treasurys and set up a great profit taking opportunity… and that’s exactly what happened.
Rising Fed rates generally lift Treasury rates – unless it’s priced in what the Fed will do or they raise less than expected. So for TLT to rally, we wanted to see the Fed’s interest rates come in lower than expected.
(It’s a little counterintuitive, but remember, when an existing bond has a lower coupon than current rates, investors may find it less appealing, and its market price drops.)
At the time, many still feared that the Fed would raise rates by another 50 basis points (bps). But since they increased by just 25 basis points, that “lower” rate sent our TLT position well into the green.
We sold on February 1 right after the Fed’s announcement for a quick 30% gain.
But ultimately, it didn’t really matter whether the Fed raised rates a little or lot… The announcement alone was the important thing.
Because these kinds of events give the markets an electric shock… and stir up volatility that traders like us are more than happy to use.
And while a 30% might not sound like much, trades like these can start to snowball your account quickly. Not to mention, we reached that gain in less than a week.
That’s the power that these money shock days can give us.
Pay Attention to “Money Shocks”
These “money shocks” are a big tool for the traders who know how to use them.
I’ve been trading these events ever since 2008 and experienced their potential firsthand.
And now I want to show traders how to up their game and do the same.
That’s why I’m planning my “Money Shock Calendar” event on February 22 this month.
We have 32 key dates coming up this year… including one that’s just a few weeks away.
So please, tune in on February 22 to learn more about how to trade these events. Traders using this “money shock” calendar will almost certainly outpace anyone who ignores all these dates…
And in a topsy-turvy environment like we’re in now, we all need an edge to make the most of our capital.
To attend, simply sign up with one click by going right here.
Editor, Trading With Larry Benedict
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