Tariffs are coming, and the market doesn’t know what to do with them. Yet.
The market is trading wide ranges while digesting fundamental inputs such as Friday’s high inflation reading from PCE and upcoming tariffs. This is creating more and more volatility, much like we saw in March as the market couldn’t find its footing.
So where does the investor turn if they’re looking for something safer? That seems to be the big question right now, but what’s clear as we await tariff news is that it’s not just a “buy everything market”. Let’s look at SPY:
The S&P 500 is whipsawing again after making a new 6-month low on Monday. We’re settling back into 2% intra-day ranges, and that’s a market that can be hard for the investor to jump into. A slow and steady market feels better than seeing a 2% drop from entry in the same day, and while the long-term returns may end up being there, the short-term comes into hyperfocus when the market is moving like this.
But there are sectors that simply ignore the noise, and one of them is insurance stocks. We can see their performance with the ETF IAK:
IAK is testing highs and appears ready to break out. On its own, IAK looks awfully safe here, with the 20-Day Moving Average providing support as we test a potential breakout to new highs.
Within IAK, I’ve also gotten a buy signal from my Artificial Intelligence signals that looks attractive, and that’s in Hartfield Financial Services (HIG):
HIG is a very similar setup to IAK, but showing even greater strength as the 10-Day Moving Average is providing support for now. This means I have potentially less risk to the downside with the same potential breakout to the upside. And on top of that, I have the leverage of options with greater liquidity than IAK, and that combination of leverage, defined risk, and of course, AI-generate signals gives me an interesting setup for a high expected value trade in an uncertain time for the market.
Once we get more fundamental inputs out of the way, there will certainly be signals from high beta and highly volatile stocks, but in the meantime, I can generate high expected value trades with lower volatility stocks thanks to the leverage of options. Highly volatile trade opportunities in the future will be exciting, but with the market being exciting enough from seemingly random up and down behavior, it is much more comforting to find a leveraged trade that keeps my blood pressure low, and that’s what gets me excited about stocks like HIG!
If you want to learn more about utilizing AI for predicting dynamic markets and the incredible opportunities that can be captured utilizing state-of-the-art technological advancements in trade recognition, just send me an e-mail and I’m happy to talk through the leveraged opportunities that I’ve historically identified by combining AI and options analytics!
And as always, please go to http://optionhotline.com to review how I traditionally apply artificial intelligence, technical signals, volatility analysis, and probability analysis to my options trades. And if you have any questions, never hesitate to reach out.
Keith Harwood
Keith@OptionHotline.com
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