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Mastermind Call Recap for 10-28

by | Oct 28, 2021

I’m sending out a written recap of our monthly Mastermind call because we had backstage issues with the recording. My editor and Zoom assistant says he’s not great yet with the intricacies of how Zoom works, and sends a sincere apology. 

But hey, that’s a great reason for you to show up LIVE! I spend a lot of time answering your questions, so come hang out for a half hour or so, and fire away with your best trading questions!

Luckily, he takes notes like a pro, so we put together a written recap of what we discussed during the call…

October has been a good month for the market, and I think November could also be strong depending on what the Fed does next on Nov. 2.

Inflation is still sticky and the Fed is likely to raise rates another 0.75% — this is 100% obvious to me… And I expect the market to rally into the next Federal Open Market Committee (FOMC) meeting.

If the Fed is a bit more dovish in tone about future hikes ahead of the midterm elections, the market could rip. 

It’s been a strange week for earnings, with a big miss for Amazon.com Inc. (Nasdaq: AMZN), which fell from $111 a share at the close Wednesday to $89 in after-hours trading, a 20% drop, only to bounce back above $100 Friday afternoon as the Nasdaq ripped higher, thanks in large part to a surging Apple Inc. (Nasdaq: AAPL).

Don’t forget, Apple is massive and accounts for nearly 14% of the Nasdaq 100, so if Apple rips a great deal, the Nasdaq 100 is likely to follow suit — and it did, ripping 2.6% higher by 1:30 p.m. Friday on the East Coast. 

Amazon is of course also one of the biggest companies in the world… It is the biggest retailer, and some also consider it a tech company because of its fast-growing cloud and web services. The fact that it cut its sell-off in half in terms of percentage is evidence that the market and the Nasdaq are strong right now, and that’s because most of the stocks were so oversold. 

So while the FOMC meeting looms, I’m taking profits off the table and keeping it moving to the next trade because the Fed could ruin the party for a bit and soon. 

That said, I see oil running much higher after the reserves that President Joe Biden released — 15 million barrels — runs out. In fact, I see oil hitting $110 soon, and going as high as $150 a barrel some time in 2023. 

You know what that’s good for? The Energy sector, for one, and oil stocks like Occidental Petroleum Corp. (NYSE: OXY), Warren Buffett’s new favorite and one of the strongest companies of 2022. 

As far as low-hanging fruit, to me, OXY is still a fantastic stock that’s cheap,* in my opinion. Its P/E ratio is 9.32, much lower than other oil stocks like ConocoPhillips (11.05) and Hess (29.64), among others. 

Its price/book ratio is just 3.69, which is super cheap, in my opinion, for a company like Occidental… 

Devon EnergyCorp. (NYSE: DVN) is another top Energy sector stock for 2022, and its price/book ratio is 4.84 by comparison. I like OXY a lot moving forward, and think it has more room to run in 2023 — even if it is overbought in the near term. 

Now for a couple of quick trade notes from our strategies…

For Money Flows Elite, I’ve taken a more tactical approach of late, and we’ve already exited two of the nine trades this month for big wins. We exited our Tesla Inc. (Nasdaq: TSLA) back on Oct. 20, hitting a 13.74% gain** on the underlying, and a 62.79% gain** on the puts. This was obviously an extraordinary trade, and I’ll break down our overall averages a few paragraphs below. 

TSLA was trading around $227 Friday, so we nailed this exit. 

Same goes for APA Corp. (Nasdaq: APA)… We went long this energy stock, but there were whispers that Russia will go back to the negotiating table with the European Union, which could send energy names down a bit in the near term. 

So we exited APA on Thursday for an 18.16% gain** in the underlying, and a fantastic 117.45%** gain on the calls. 

So we also nailed timing out of APA, getting out at the perfect time. By Thursday’s close, the call options for APA were $1.20 lower than our exit, and the stock fell again Friday, down as much as 3.5% in the morning. 

This is exactly what I mean by being more tactical and trying to better time these exits. And like I said above, I’m going to take the money and run in some instances before the Fed has a chance to spoil the party. 

To paint the full picture, since the program’s inception on Sept. 3, 2020, through Oct. 27, 2022, the average gain per trade for underlying stock positions in Money Flows Elite is 1.12% over an average hold time of 25 days. The average gain per option, including winners and losers, is 3.06% over an average hold time of 28 days. We’re also hitting an average return of nearly 18% with an average win rate of 52.38% for 2022!

For Link Trades, where we trade in pairs, going long one stock and short another that’s related, we got hit with a black swan event that sank our iShares MSCI United Kingdom ETF (NYSEArca: EWU) when the Prime Minister of England resigned after just 45 days…

The market saw that as good news, hurting our puts. However, the other end of that pairs trade, the Invesco QQQ Trust Series 1 (Nasdaq: QQQ), came up a big 95.1% winner,** closing out at $14.80 a contract and almost doubling our $7.57 entry.  

Our average return for options in 2022 for Link Trades is 15.19% — including winners and losers — over an average hold time of 32 days. Our average winner on the underlying stocks for 2022 is 12.88% over an average hold time of 50 days — I’ll take that all day in this market!

We also had a couple of nice trades in Burn Notice… In fact, we’ve had a perfect week, going 3 for 3 in positions in…

  • Halliburton Co. (NYSE: HAL) —  3.05% gain** on the underlying; 20.92% gain** on the puts. 
  • Nvidia Corp. (Nasdaq: NVDA) — 2.57% gain** on the underlying; 17.6% gain** on the puts. 
  • Schlumberger NV (NYSE: SLB) — 0.35% gain on the underlying; 7.07%** gain on the puts.

Since the program’s inception on Dec. 15, 2020, through Oct. 25, 2022, the average weighted overnight gain is 1.67%, including winners and losers, with a 51% win rate on the options. 

That’s it for this month’s mastermind call — we’ll talk again soon! Try to make it LIVE next month if you can!

*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
**Stated results are atypical for given period. Past performance is not indicative of any future results. Trade at your own risk.




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