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The market just got a bit of a reality check.
Last week, after running up more than 60% with no significant pullbacks, the Dow Jones Industrial Average finally took a 5.3% haircut in a matter of six days.
Then, on Monday, the Dow plunged by as much as 1,500 points in another big selloff before rebounding slightly to finish with a 1,175-point loss.
Should you be concerned? Here's the reality...
This recent market rout was a much-needed break in the rally. At the very least, it's a sign that reality still counts for something in the stock market.
The increased volatility has certainly shaken the confidence tree that's been planted in many investors' yards. At this point, it's still unclear as to whether that volatility will continue in the near term, and it's possible the next bullish run may take a little longer to get started.
Volatility Brings Opportunity
Market shakeups like this may send some investors racing for the sidelines... but not for me and my subscribers over at Profit Amplifier. Selloffs can provide better entry points for our trades -- and that's an opportunity I don't often pass up.
Case in point: Thanks to all the confusion, the market gifted us the chance to nab a better entry price on two of our recent trades.
The selloff has brought the share prices of both McDonald's (NYSE: MCD) and Cemex (NYSE: CX) a little lower, giving us a chance to obtain better entry prices by averaging down our costs.
Both of these positions are perfect candidates for this strategy: I still feel strongly that each of these stocks has solid growth trends that will continue pushing prices toward our targets. We are already established in both of these trades, with summer option expirations more than a few months away. And finally, in both cases, we had already anticipated weathering some storms.
Essentially, nothing has changed, but we've been given the ability to lower our entry price. We've even already locked in some of our profits from our MCD trade when we sold half our position at the highs of the year for a quick 17.7% gain.
For those who are curious, I wrote about my original thesis for Cemex here. And while I can't reveal the exact details of these two trades out of fairness to my premium readers, just know that, thanks to our proven options strategy, we can navigate market volatility like we're seeing right now with little problem. In fact, using the power of options, we can profit from the upside and downside of individual stocks, depending on the situation, while risking very little capital in the process.
The upside? We're talking about returns of 31%, 35% and more -- all in a matter of weeks rather than months or years.
If you're not a subscriber to Profit Amplifier and missed my original recommendation on either of these stocks, you can still use these trades to enter the position.
As for the coming week, the market is still a bit grey at the moment, and I'm still searching for additional opportunities. Over the next couple of days, I am going to research, run models and algorithms, and analyze everything I can to find our next (new) trade. It all depends on whether I see any good "buy" or "sell" signals.
Bottom line, my stock market raiding technique is the best way to increase your returns while preserving capital and reducing risk. Of course, that's only if it's done correctly.
That's why I created a special report that will walk you through the steps I take when going on market raids, which should help you avoid the costly mistakes many new traders experience. If you'd like to make trades like the two I mentioned today -- or even potentially make 80% when a stock only moves 8% -- go here.
Following the company's earnings report, volatility is elevated more than five times higher than the level it was before. That's perfect for today's setup.