Everybody treats the summer market like a season to survive.
The volume dries up, the big institutions head to the Hamptons, and the old Wall Street saying tells you to sell in May and go away.
Most folks read that as a reason to hit the links and check out until September. I read it as the opposite, because the slow months are some of my favorite months to trade, and I want to show you why.
When the volume drains out of the market, it doesn’t just get quiet, it gets thin and twitchy.
With fewer big players around to absorb the orders, it takes a lot less to push a stock around, and studies have shown those skinny-volume stretches have the potential to crank the size of the swings up rather than down.
Individual names start outrunning their headlines.
A long-term investor can sit through all that as noise, but for a short-term tactician like me, it presents massive opportunity.
I’m not trying to guess where a stock lands six months from now.
I’m hunting the dislocation, the fast move, the spot where a thin tape lets a name run too far too quick, and summer hands me more of those than any other time of year.
Let me show you exactly what I mean with a trade I put on yesterday.
You probably noticed EchoStar (SATS) ripping higher over the past couple of months. That run wasn’t really about EchoStar.
Traders were using the stock as a proxy to play the SpaceX (SPCX) hype into the big IPO.
Since EchoStar holds a chunk of SpaceX, it was the easiest way to own a piece of the rocket before it blasted off to the moon.
Then the math changed.
SpaceX is now public, and its options started trading this week.
So, there’s no reason to pay for the proxy when you can buy the real thing.
The whole point of holding SATS evaporated, and that crowded trade had every reason to come undone.
I read that setup and bought the June 18 $120 puts on SATS at $4.69. The thin tape did the rest.
The stock whipped through a wide range, dropped hard intraday to a low of $114, and I was out at $6.20 in under an hour.
That worked out to a 32.2% gain before lunch, on a move the quiet summer market made faster and sharper than it ever would’ve in a packed February session.
That’s what smart speculation looks like, reading the dislocation and striking while the thin tape is doing half the work for you.
YOUR ACTION PLAN
I placed that SATS trade in The War Room, calling the entry and the exit as it happened.
As a member, you have full access to great insight like this all summer long.
Take your vacations. Make your tee times. But be sure to follow along as we continue to crush this market.