Editor’s note: Pepsi showed up on my Delta Strike scan Friday with heavy call buying, so I bought it. I closed those calls today for 60%.
Tim Colby found the same name before I did and he’s still holding, looking for a much bigger move. He’s been trading since 2001, we traded together in the CBOE. He’s one of the few people I check in with in the morning to find plays.
He’s going live on Thursday, August 27th, at 7 pm ET to share how finds winning trades.
— Mark Sebastian
I’m going to give you the 3 things I look for before I put money on anything.
They’re not indicators and there’s nothing to buy.
It’s a way of reading a chart that’s been beaten down, and it tells you whether the thing is dead or whether it’s about to move.
I used it on Bitcoin last week, which is funny because I don’t like Bitcoin and I’m not shy about saying so. I bought calls anyway and it went off like a rocket inside a day.
I bought GLD calls August 4th, on the same pattern, just before the breakout. and those option went up 100% in two days.
Right now the same three things are lining up on a group of stocks I’ve been calling the war stragglers.
I’m going to share two of them with you now.
Lets start with what I don’t do, because it can save you a lot of money.
I don’t fight a trend. If something is going down I leave it alone, because you never know when it ends and it can just keep going. You watch the trend instead, and you wait for it to stop being a trend.
What I’m waiting for is a shift. There are three kinds and I want at least two of them.
A shift in the story.
Something changes in the narrative around the name or the sector. On gold a few weeks back it was Warsh coming off more dovish than I think he meant to, and then the yen intervention on top of it.
A shift in the money flows.
I track where capital is moving between sectors day to day, and I watch for it arriving somewhere it hasn’t been.
A shift in the options.
Somebody starts paying up for upside that wasn’t being bought before. Pepsi came up on Mark’s Delta Strike last week with real call buying in it, and that’s exactly what I mean.
Here’s what it looked like on Bitcoin.
I was short it on the way down and I wasn’t fighting anything. Then it put in a false breakout, rolled over, and went into a tight consolidation.
Then Bessent announced the twist.
The rally cry of all rally cries for Bitcoin is government intervention on currencies, and that’s what he just did. I looked around and gold was running, the dollar was selling off, treasuries were ripping.
So I thought, dude, this is Bitcoin. I hate Bitcoin, but let’s go grab some calls.
That was a monster and it happened fast. That’s what these coiled ranges do when they finally go.
Now look at Pepsi and Kroger.
Both were strong into late February. Both were coiling up like they wanted to break out. Then the war started and the whole consumer staples sector got taken out, and neither one has gone anywhere since.
These aren’t obscure names. Warren Buffett owns some of these. Some of them are Berkshire holdings, sitting way below where they were in March while the S&P went on without them.
The story shift is coming from oil, which is sitting at $87 when it was on a clean path lower before the war. The 10-year is a tail to oil prices, and that’s the whole overhang.
Money flows are what I watch every morning, and the options shift already showed up in Pepsi, which is how Mark found it.
I’m long Pepsi and Procter & Gamble already, I’m long December calls, and I want to hold these until they get back toward their highs.
Now, if you take anything away from reading this, it’s that money doesn’t leave the market.
Look at what’s happening in the bond market right now. Inflation is going to burn folks. That means having money sitting around is going to kill you.
You’ve seen it at the grocery store and at the gas pumps. You’ve seen it in the real estate market.
Even on days like today where we see tech take a beating, money doesn’t leave the market. It just finds a new home. And that is the game right there.
Thursday night I’ll walk through how I play this game, and I’ll show you the system I built to stay one step ahead.
I’m going live at 7 PM Eastern on the 27th. Register and you’ll get the option of a VIP ticket, which comes with three bonuses I’ll send before we go live.
Let’s make some money.
Tim Colby