Hello Trader,
Coming into this week’s trading, the market was pretty darn wild, with major indices rallying a lot more than many traders thought was possible.
Was this rally a surprise to me?
Heck no!
Because I called the Death Cross over a week ago!
You know what else was wild ahead of the start of this week’s trading?
The 17% intra-week rally that my previous Bullseye Trade, ZIM Integrated Shipping (ZIM), witnessed. That’s what!
While it should always be a trader’s goal to improve with each passing trade, it’s basically impossible to increase the amount of money made on every new trade.
That’s why I am just thrilled that the newest Bullseye Trade that I alerted members to this past Monday.
Oh, and did I mention that this week’s Bullseye pick took just four days to reach my target, while the previous week’s pick took only two days?
The moral of this story, folks, is that while this week’s Bullseye Trade did not top the prior week’s, I am still thrilled with the strong results!
Right now, this market is all about narratives coming out of the war in Ukraine.
So with Putin growing more and more desperate, I used a very simple quantitative tool, which you also have access to, to find this week’s big Bullseye Trade within the agricultural industry.
Stick with the strong sectors when the market is volatile
After the sharp rebound in tech stocks coming into this week’s trading, I decided to focus on sectors that are not as highly correlated (correlated stocks trade a lot like the SPY and QQQ) for my Bullseye Trade idea this week.
That’s because massive rebounds like the one SPY and QQQ have seen since their mid-March lows are unusually followed by a bit of a breather.
That’s how I came to find a little gem named Archer-Daniels-Midland Company (ADM).
ADM is just this boring little company that makes seeds of all things.
Throw in the fact that it also trades in a strong industry (agriculture) that is in high demand because of the Ukraine war narrative I mentioned earlier, and this idea pretty much sold itself.
But, hey!
I am all about giving my members more than their money’s worth, and that’s why I also told them to look at mining stocks this week as an honorable mention.
If you didn’t see what mining stocks did this past week, well, let’s just say that stocks across multiple mineral mining industries were on a tear this week.
In 2022, we’ve seen a HUGE rotation out of popular stocks like tech stocks into agricultural stocks.
How do I know this?
Well, because I used one of those simple relative strength ratio (NOT RSI – the relative strength index) charts that represent the simplest form of quantitative analysis that any retail trader can use.
Below, we see this ratio chart, which is constructed by taking the agricultural ETF (DBA) and dividing it by the technology ETF (XLK).
When the line is rising, it means that the security in the numerator position (DBA) is outperforming, and when the line is falling it means the security in the denominator position (XLK) is outperforming.
So just by looking at the huge rotation higher in this ratio line this year, the leadership push by agricultural stocks becomes quite obvious.
When you’re doing your research, let this be a reminder that money is always flowing in and out of different sectors.
Therefore, it behooves you NOT to fall in love with trading just one sector, like the popular tech sector.
Honestly, I don’t see anything in the near future that’s going to make commodity prices and the agriculture stocks collapse.
Will they see dips?
Sure, all stocks rally in a stair step manner.
As you can see from the next chart, ADM has been moving up and to the right for a while, which is the kind of strong trend you want to participate in as a bullish trader.
To YOUR success!
