Hey There Income Hunters,
The “sell in April, buy in May” trade that I outlined on April 26 has worked like a charm.
Looking ahead, if you’re interested in big profits this summer it’s time to load up for the push to new highs in the SPDR S&P 500 ETF Trust (Ticker: SPY).
Here’s why I say that: SPY has risen from the lows of May to new highs in June each of the last four years:
The highs in June may even end up being the highs for the year — so you need to capitalize now.
Today, I will share the stocks I added to the Power Income Portfolio yesterday to set up for this run, the logic behind the spreads I chose and why I like these companies so much (hint: it has a lot to do with risk/reward and return on capital).
5 Stocks for the Run to All Time New Highs (And Beyond)
- General Motors Company (Ticker: GM)
- My Power Income Fair Value Price, which is calculated below, is $70. GM closed Friday at $56.
- GM, via a joint venture with Hong Guang Mini EV, sold the second most sold the second-most electric vehicles globally in March.
- GM has plans to launch 30 new EVs within four years and is a must-hold stock through the electric vehicle revolution.
- The Power Income Trade in GM:
- Marathon Digital Holdings (Ticker: MARA)
- MARA’s price has fallen recently, so this is a good time to get in — especially since MARA is a miner for Bitcoin, which is currently trading 20% below it’s high of $62,000 and is sitting at the bottom of it’s recent trading range. (See chart below.)
- MARA has a huge advantage over mining competitors because of a partnership with Beowulf Energy. The Las Vegas-based company will own a bitcoin mining facility and retain all mining output — with fixed cost of electricity near the industry low.
- With the Beowulf partnership in place, MARA has built a barrier to entry around its mining business, which makes it the stock of choice in the Bitcoin world …
Power Income Trade in MARA:
- PENN National Gaming (Ticker: PENN)
- I love the Barstool Sports and PENN connection.Barstool is hugely popular in the all-important New York iGaming market and the partnership continues to elevate PENN’s exposure there.
- The real value for this trade is the 50% dip that gaming stocks have suffered since March. I am bullish online gaming stocks, especially PENN. Take a look at the location for this trade …
- I will close out the trade and take a loss if PENN’s price makes a new low. Conversely, I’ll add another call spread if the price breaks back above the 200-day moving average.
- The Power Income Trade in PENN:
- Advisor Shares Pure US Cannabis ETF (Ticker: MSOS)
- The future for legalized recreational and medical cannabis is bright. I can go so far as to say I’m high on cannabis. (Wait a minute …)
- But seriously, the extent to which mariuanna has been vilified in our country is pathetic. Did you know it is still placed in the same category as heroin? In reality, it’s on the opposite end of the spectrum in terms of lethality and addictiveness. In fact, health experts are finding tremendous medical benefits …
- Now is the time to buy the cannabis stocks because the regulatory uncertainty is driving a major correction in the industry. The end result will be legalization at the Federal level and the stocks will take off.
- You want to buy U.S. multi-state operators because that is where the greatest growth opportunity is …
- I like MSOS because they weigh the U.S. companies higher in the ETF, including Curaleaf (Ticker: CURLF), Trulieve (Ticker: TCNNF) and Green Thumb Industries (Ticker: GTBIF). They’re all over-the-counter stocks, which is why MSOS is ideal.
- The Power Income Trade in PENN:
- JD.com (Ticker: JD)
- I couldn't hold off any longer. I have been wanting to buy this name, but China stocks have been getting drilled for weeks so I stayed patient and it paid off.
- JD now trades at a 33% discount and I got a bonus positive relative strength index (RSI) to JD price divergence out of it by waiting. JD’s price made a new low on Friday while the RSI made a higher high.
- Such divergences put the odds in your favor that the market will reverse because it is showing there is no longer any strength to the down trade. Check it out:
The Power Income Trade in JD.com:
Bring it Home
This was the Power Income Portfolio’s best week to date. …
I am loving the low maintenance and great risk/reward parameters offered by vertical option spreads. I’m using them almost exclusively at this point and think they’re a great tool for #Income Hunters as well.
Next week, I’ll expand on how you can use the verticals to your advantage, and I’m building Wednesday’s Power Income LIVE around them. That will be your chance to weigh in and have all your questions answered about my strategy.
And, of course, you can always drop a comment below.
Until then …
Live and Trade With Passion My Friends,