You won’t want to miss this one (exclusive sneak peak)

Special Weekend Edition

I used to beat myself up whenever I exited a good trade too early.

... or too late.

... or really anytime I didn’t get the perfect exit on a trade.

Which is ridiculous because the perfect trade doesn’t exist. I’ve since learned to relax more in my trading and allow myself to get in, set targets, and be patient for the market. Sometimes the market lets me hit a target, sometimes I have to take an early exit. And sometimes I have to accept a loser and move on.

That’s trading.

The best way I’ve found to be consistently profitable is by stacking probabilities. That is, only getting into a new trade when the odds of it doing what I want are in my favor.

Most of the time it works. Sometimes not, but that’s no big deal.

There will always be another trade.

Before we get into today’s newsletter, I wanted to let you know about a couple of things:

(1) I will be traveling on Wednesday, so that newsletter will be significantly later than normal.

(2) I’m giving everyone an exclusive look at today’s ENTIRE newsletter, so you can see behind the paywall of what the Premium subscribers get.

Wow! What a difference a day makes! We were not just green yesterday, but deep, dark, Forest Green! The Fed Chairman hinted very strongly that there would be rate cuts next month and the market seemed pleased! Even bitcoin was up almost $5,000. If your positions were underwater, they are at least closer to the surface now. 

Monday could be interesting with either a profit-taking day, or a short-squeeze margin-call day which would further propel us “green-ward.”

We went from 64 last week DOWN to 61 even with the large upswing on Friday. Admittedly, we had some tough days earlier in the week. This bodes well for a continued bullish run for a few days, in my opinion. (But my opinion doesn’t really matter … the Market’s opinion matters!)

Yahoo Finance

Why it matters …

The opening paragraph of the article really says it all …

“Federal Reserve Chair Jerome Powell signaled to investors on Friday that the central bank is likely to embark on a cycle of lowering interest rates as soon as September.”

The jobs data that was constantly being published as rosey, then revised as thorny months later indicates that the economy is not as strong as the “not low enough” inflation numbers might suggest. I expect the Fed to lower interest rates 0.25% in September, and probably another one later this year.

The market applauded with very green hands.

Two real trades collecting $252 of premium for single contract trades. Average Return on Risk (ROR) = 1.50% for this week.

Average Return on Risk (ROR) = 1.29% for this week.

Sample Returns = $233 for single contract trades -- that could cover over 10 months of a Premium subscription, if someone took all of those trade ideas. 

...

[Exclusive sneak peak at the Premium content - Today only]

Real Trade Spotlight (Premium subscribers only):

Comments: Well, the Fed’s dove-ish comments on Friday made this week’s trades end up pretty drama-free. Not much to say here, just that the big bullish days make the trading system easy-peasy-lime-squeezy.

Sample Trade Spotlight (Premium subscribers only):

Note: These were sample trade ideas shared for educational purposes only. I don’t always personally take these trade ideas; I share them to help you learn.

Comments: Well, last week’s trade ideas worked out well, this week’s not as much. No big deal in the trading system, just roll as needed.

Notable stocks with weekly options reporting earnings next week:
Legend: BMO = Before Market Open; AMC = After Market Close; TNS = Time Not Supplied; TAS = Transfer Agent System (meaning, there’s no press release)

Monday 8/25

Tuesday 8/26

Wednesday 8/27

Thursday 8/28

Friday 8/29

My trading system discourages selling Puts on any stock or associated ETFs the week of earnings as they cause fundamental unpredictability. (Think landmine!)

We are nearing the end of the earnings season for the quarter so there are many fewer landmines out there. Retail sales earnings last week were somewhat less than stellar, but not really bad.  The market interpreted any negativity with a “slap” to the stock price.

Source: Stock Trader’s Almanac 2025

“August’s third-to-last trading day, S&P up 19 years in a row ‘03-’21; Last trading in August, S&P up 13 of last 24 years, but down last 6 of last 9.”

Mon., Aug 25 – 🐂 Bull Day S&P 500 Up 61.9% of time, D:52.4%, N:61.9%

Tue., Aug 26 – Neutral Day S&P 500 Up 57.1% of time, D:47.6%, N:57.1%

Wed., Aug 27 – 🐂 Bull Day S&P 500 Up 95.2% of time, D:90.5%, N:85.7%

Thu., Aug 28 – Neutral Day S&P 500 Up 47.6% of time, D:42.9%, N:61.9%

Fri., Aug. 29 – Neutral Day S&P 500 Up 52.4% of time, D:47.6%, N:52.4%

Comments: I don’t remember ever seeing such high probabilities of a bull day like what appears to be Wednesday’s prediction. Keep in mind that these seasonality predictions were made before the 2024 election, so Trump’s policies could throw a wrench in everything.

Still, the Almanac has been surprisingly accurate for a long time and I use it for a reason (that reason being I think it gives me a trading edge).

I  have to admit, I was wondering if the markets were starting a bigger pullback after the downward movement this week and then Friday happened.

SPY

I’m still wary of the $648.98 level, but the massive bullish movement after Friday’s post-Fed meeting talk has me rethinking some things. 

I’ve heard a lot of chatter about the bears in the markets who have been looking for a topping action and then a deeper pullback. Although I’ve been worried about this possible pullback, unlike those bears I’ve not been putting money down against the markets. After all, my slow-and-steady strategies are bullish in nature.

Anyway, it seems that there’s been some pretty big bearish action in the markets and this might be the catalyst for a short-squeeze. If that is happening, it means that bears who are short the markets may be forced to buy shares which could cause some irrational moves higher.

The story is basically the same for the NASDAQ, the DOW, and the Russell.

QQQ

The QQQ’s had a deeper pullback than the other indexes, and it may be a bit of a laggard here for a little bit. If the institutions move money out of the NASDAQ and into the Russell (sector rotation, not an overall trend) then it might turn from leader to laggard for a few months.

I don’t know, and it’s waaayyyy too early to make a prediction, but I’m keeping my eye on it.

DIA

Big moves on the DOW. Pretty much the same story as the S&P 500.

IWM

The biggest reaction to the Fed’s dove-ish take (strongly indicating a rate cut in September) was from the Russell. Not a surprise, it’s the higher rates that has been keeping the smaller cap stocks stifled and a cut will loosen the cuffs on them.

Sometime last year I noticed a weird couple of months when money moved out of the NASDAQ and into the Russell and then eventually moved back into the NASDAQ. I don’t know yet, but I suspect that may happen for a bit now too. Time will tell.

/BTC (Bitcoin Futures)

Despite the nasty pullback in Bitcoin this week, it held the zone of the 50-day SMA / the previous high before the 120k breakout.

With that Squeeze false-firing down and the quick turnaround, it might start slingshotting into new highs. I wouldn’t be surprised if it hit 130k in the next few weeks.

…

I hope you enjoyed today’s extra-stuffed crust newsletter. If you haven’t upgraded to Premium yet, I hope you’ll consider it. I try to share trade ideas that Premium subscribers can use to make many times their investment back.

Regardless, I’m happy to have you as a reader and if you ever have any questions, you can always reply to any of these emails.

Enjoy your Saturday.

— Ricky Ketchum