This Is the Ideal Environment for Short-Term Traders By Larry Benedict, editor, The Opportunistic Trader Market volatility is coming back in a big way… and that’s good news for traders. Last week, the S&P 500 broke its streak of 356 days without a 2% daily decline. That was the longest streak since 2007. Then earlier this week, the S&P 500 put in its best performance on a Federal Reserve meeting day in over two years. Those types of moves may look choppy, but it’s the ideal environment for short-term traders. We’ve already taken advantage by trading calls on the SPDR Gold Shares ETF (GLD), which tracks gold prices. We entered that trade on July 25 and exited in two parts on July 30 for a blended gain of 29.5%. Here’s the GLD chart below… 
(Click here to expand image) After testing new high ground around the $230 level, GLD began pulling back. But then GLD found a confluence of support levels. That included the 50-day moving average (MA, blue line) and price support at the $219 area. The Relative Strength Index (RSI) found support near the 50 level. From there, GLD rebounded and handed us a nice gain in just three trading sessions. Last week, we also added puts on the Invesco QQQ Trust Series 1 (QQQ). Since adding the position, sharp swings in the stock market have shifted this position back and forth from gain to loss. A sharp drop in QQQ yesterday and today put this position back in the green. So we sold half our position this morning for a 91% profit. And then we sold the remaining half for a 172% profit. That’s a blended gain of 131.5% in just six trading days. Take a look at the QQQ chart below: 
(Click here to expand image) And this morning, we opened a position on the iShares 20+ Year Treasury Bond ETF (TLT). I’ll cover that trade in next week’s update. We’re also holding on to puts in Tesla (TSLA), Apple (AAPL), and the ProShares Bitcoin Strategy ETF (BITO). (Note that we sold half our TSLA position for a -21% loss this morning. We’re still holding the second half in anticipation of this trade turning back our way before expiry.) We’re currently down on those positions, but there’s another big catalyst in the works that can still drive our put positions back into positive territory. That’s the Fed. Stocks initially responded favorably to the latest rate-setting meeting this week. Comments from Fed Chair Jerome Powell put a September rate cut firmly on the table. If it happens, that would be the first rate cut of this cycle. But as I wrote here, the Fed has a history of being behind the curve. By the time the Fed is easing monetary policy, the damage to the economy is often already done. Rate cuts have even occurred right around the start of the worst bear markets in history, including the Great Financial Crisis in 2008. That means we may be facing a broader negative trend in the stock market soon… And that would boost our other put positions, which all have a September 20 expiration. With volatility coming back in a big way, there’s still plenty of time for our trades to work in our favor. Happy Trading, Larry Benedict
Editor, Trading With Larry Benedict Download the Opportunistic Trader Mobile App To make sure you don't miss any alerts or updates, please download the free Opportunistic Trader Mobile App for iOS or Android. The app enables you to get notifications whenever we publish something new. Make sure push notifications are enabled through your phone settings to receive alerts from the app. You can also access all of your subscriptions and view portfolios. And if you use the app and find it valuable, consider leaving us a review on the App Store or Google Play page. | | 
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