The markets have been keeping things interesting this week.
The S&P 500 and Nasdaq both notched fresh highs, while the Dow is still knocking on the door of a key resistance level—trying to break through to the upside.
Meanwhile, the latest round of economic reports gave us a split decision: one pointed toward a likely Fed rate cut in September… while another said, “not so fast.”
That tug-of-war between the bulls and bears is exactly why it pays to plan your trade – and trade your plan.
And on Thursday, August 21, at 7pm ET, I’ll show you the exact strategy I’m using to profit… even as Wall Street braces for the worst months for stocks.
It’s up 29-0 this year…
It’s already delivered over $21,000 in profits…
And it hasn’t lost a single trade.
Then, check out the latest questions that my inbox. The last one could help you in your next trade…
Q: Tom, if I have a straddle on and the security moves enough in one direction that the profit from one side (call or put) makes the whole trade profitable, can I close that side and leave the other open?
Very good question… I’m guessing you’ve had this happen before. If so, congrats on the winning trade.
Here’s the deal: A straddle means you bought both a call and a put (same strike, same expiration) in one order. Let’s say the stock pops higher, and your long call alone makes the overall position profitable. You can absolutely sell the call and keep the put open.
At that point, I consider the put a “lottery ticket.” The odds of it coming back to break even (or better) are slim. But since the trade is already in the green, you can hang on to it and see if you squeeze out a little more before expiration.
Q: If I take a trade based on a signal, and then that signal disappears, should I close the trade?
This one’s a bit trickier without knowing exactly which signal you’re using. But here’s my general rule of thumb:
If your rules say to exit when the signal goes away – then you’ve got your answer.
If your system has no such rule, then go back to the plan you had when you entered. What were your profit and stop-loss levels? Stick with those until one of them is hit.
In other words… trade the plan, not the noise.
Q: Tom, what are CPI and PPI, and why do they matter to traders?
The Consumer Price Index (CPI) measures what consumers are paying for everyday goods like food, housing, and healthcare. It’s the go-to gauge for inflation at the consumer level—and plays a big role in Fed policy decisions.
The Producer Price Index (PPI) tracks what domestic producers charge for goods before they hit the shelves. It’s considered a leading indicator because rising producer costs often show up later in consumer prices.
This week, CPI came in soft—one reason the Chicago Mercantile Exchange Group (CME) FedWatch tool now shows a 94.1% chance of a September rate cut. But PPI jumped, especially in services and wholesale sectors, which tells us that businesses are already feeling higher costs.
So, to sum it all up, CPI tends to move markets faster, but PPI gives you a forward-looking edge.
I watch both and act when the data lines up with my chart patterns.
Have a great weekend!
Tom Gentile
America’s Pattern Trader
