Dear Student,
As you probably know by now, Israel launched a wave of airstrikes on Iran overnight, claiming it was in direct retaliation for Iran’s recent drone and missile barrage that targeted Israeli territory.
Naturally, the markets didn’t take the news well. Dow futures were down by as much as 700 points before the opening bell. And, at the time of writing, the DJIA is in the red by 1.13%… the Nasdaq is off –0.7%… and the S&P 500 is dragging –0.60%.
Since the strike, Iran has fired over 100 drones toward Israel—but so far, every single one has been intercepted before impact. And while Iranian officials are calling this an act of war, no U.S. soldiers have been deployed to the Middle East in response… at least not yet.
Now, the markets have climbed off their early lows, but the situation is still tense. And the potential for more retaliation is, no doubt, high.
But here’s how I see it…
This entire sequence—and what may still come—could open the door to some unexpected opportunities. I’ll be keeping a close eye on everything, including some potential trade setups, over the weekend.
In the meantime, I want to make sure I answer three questions that came into the Patterns & Profits mailbag this week.
Let’s jump right in…
QUESTION: I watched one of your recent videos and saw that you’re bullish right now. What about the “Sell in May and Go Away” factor? Aren’t the summer doldrums something to be concerned with?
Great question—glad you brought it up.
Why? Because it gives me a chance to say something I’ve been shouting from the rooftops for months now: Sell in May and Make Money Today.
That’s right. The old rule of walking away from the markets in summer? It’s outdated. In fact, I even wrote a special report on it called “Why ‘Sell in May’ Is Dead.” You can grab a copy right here.
But, to answer your question directly, the markets have changed. Globalization, algorithmic trading, and a wave of active retail traders have transformed the way price moves—especially during what used to be the slow season. Add in real-time data and you’ve got a market that responds faster – and trades more efficiently.
On top of that the May to October window has actually delivered positive returns in recent years more often than not. That’s the exact opposite of “Sell in May.” And that tells us that the so-called summer doldrums aren’t something to lose sleep over.
QUESTION: Tom, you recently said that the government printing money is good for stocks. How so?
Another great question!
When the government prints money, there can be a silver lining for the stock market. The first benefit is liquidity. More money in the system means more cash in the hands of investors. And when people have capital, they look for ways to grow it—often turning to equities.
Another benefit is lower interest rates. When the Fed prints money, it often does so by buying government bonds, which drives up demand and drives down yields. Lower yields make bonds less attractive… and push more money into stocks.
And the result? A flood of capital moving into equities, boosting prices across the board.
QUESTION: Is a call spread really considered two trades instead of one?
I’m glad you asked because this is one of the most common mistakes traders make. And I’m glad you’re asking before placing your trade.
To be as specific as possible, let’s talk about a call debit spread, which involves trading two different call options to build one strategic position.
It’s considered a single trade, executed on one ticket—but it involves two legs:
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You Buy to Open one call at a lower strike,
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And Sell to Open another call at a higher strike, both with the same expiration and number of contracts.
This combo creates the spread. When it’s time to close the trade—whether to lock in a profit or cut a loss—you simply reverse both legs.
But before you do anything… I strongly recommend talking with your broker’s support team. Make sure the strategy fits your account and that you’re comfortable with how to enter and exit the position on their platform.
Trust me—it’s worth the five-minute call to get it right the first time.
We’ll talk again soon…
Until then, enjoy your weekend!
Good trading,
Tom Gentile
America’s Pattern Trader
