Fear in The Markets Rules
By: Russell Barbour
Tags: Money Mindset

As the market tries to bounce today after the worst beatdown the DOW has ever seen (3000 points) — I’ve been busy speaking with traders and asking them questions about what they see out there, and more importantly, what they’re doing to capitalize on this historic volatility.

Not only is the stock market well off its highs (nearly 30%), but it’s shaping up to be the worst month since 1987.

However, I’m not here to go doom and gloom on you. In fact, I want to do the complete opposite. I want to introduce you to the traders who are having the most success in this market, and see if we can tap into their winning formula.

Anytime you have a chance to sit down and watch a guy who is up six figures this month, and is willing to teach you what they’re doing to make money — you take it!

Check out how Kyle Dennis makes 6-figures a month options trading!

I wanted to take a few moments and tell you about Ben Sturgill and what he’s doing over at Daily Deposits.

He’s not only gone the whole month of March without a losing trade.

But he’s also amassed total gains of 352% during that period.

And his subscribers couldn’t be happier…

What is he seeing in the SPY that others can’t? And how is he consistently able to profit in such a tough market?

Well, I asked Ben to share his notes with me, and he agreed.

It’s chock-full of incredible market insight — that you can take today and instantly start applying to your trading process.

At the end, you’ll find a link to join and trial Ben’s Daily Deposits program…

A no-brainer at this point.

Here are Ben’s notes:

Fear Drives The Markets

Many believe fundamental analysis is the only market driver, and these last two weeks make one thing very clear… Fear is the current driving force behind every market move.

And since I focus heavily on momentum it’s essential to closely monitor the premarket session.

So why do I focus on momentum in the premarket session?

There are many clues that indicate which direction the markets are going to move once they open that you can only find from premarket data!

And this led me to develop my premarket momentum strategy to quickly and easily identify all of the premarket information that I need to make the correct trade.

So how does it work?

My go-to blend of momentum indicators premarket is:

Price and volume analysis

Moving averages

Support and resistance

Stock volatility screener

Timeframe analysis

Premarket Analysis

When looking at premarket trading sessions, it’s important to break down those 5 major categories before placing any trades.

I first try to piece together what is happening in the markets. And I do this by using 3 primary timeframes, the 5,10, and 15 minute charts.

Here is a sample of what I look for based on the 15m chart.

Source: Thinkorswim

Here are the 5 key things that stood out to me in the overnight trading session.

The long term trend is lower The short term trend is lower Markets pointing lower with 10 MA < 20 MA Heavy trading volume heading into the open No TTM Squeeze seen

So before placing any trades in the markets, I always turn to these indicators to give me a heads up about what the market is thinking.

Once I determine the trends and other supporting factors of the premarket trading direction, it’s time to locate support and resistance levels.

Here is what I saw looking at the 15m chart.

Source: Thinkorswim

Let’s break this down further…

Here are the 3 main points from this chart:

Looking at prior overnight trading sessions, it appears that the markets respected prior resistance levels from two sessions ago.

The markets are trading at overnight lows at the prior trading session lows.

There was a halt in the overnight trading session that formed a natural resistance level.

So what’s the conclusion after analyzing the premarket chart?

Well…since previous support and resistance levels were respected, it’s safe to assume that all levels will be held, at least temporarily.

It’s also ok to assume that any future levels will also be held until otherwise shown to gain momentum and negate that trading level.

Let’s take a look at what happened with the markets right at the open.

Source: Thinkorswim

And as expected, the markets bounced right at the prior support level, and traded right up to the prior resistance level.

Then once the resistance level was touched, it posted its first major red bar and corresponded to an overbought RSI.

This indicated the markets were pacing to head lower and targeting back to the day’s lows made earlier in the morning.

The Trade

So now I have a clear understanding of what is going on in the premarket and the morning trading session.

By going through the 5 steps to analyzing premarket momentum, I have uncovered the internals the markets are trading off of.

Now that the markets respected the prior support and have traded up to the resistance area, the trade is to get short the market.

One of the best approaches I like to use is to make sure I pick an option that has some “bang” to it.

Typically, weekly options are one of the best ways to make sure you get that explosion in the options prices.

Here is where I would find the put contracts in the options chain.

Source: Thinkorswim

And here’s what the Daily Deposit members were alerted to once this setup was triggered.

This one made us keep our heads on a swivel and really analyze the market closely for the correct trade.

But we got it right!

If you got into this trade, you could have been looking at a 20% winning trade in just a matter of a few hours — on one of the SPY’s hardest-hit trading days since 1987!

Here’s a view of the option prices throughout the trading day to show you that you could have made up to 140% on this trade, if you timed it perfectly!

Source: Thinkorswim

And it’s that simple!

This trade returned a monster home run trade!

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