 | 3 Dead Cat Bounce Trades to Make This Week by: Michael Carr | Editor, Precision Profits
January 08, 2023 Banyan Nation,
Right now, Silicon Valley faces an existential crisis like we haven’t seen in over 20 years.
Back then, in the aftermath of the dot-com bubble, hundreds of companies failed, went bankrupt and disappeared.
I predict the same thing will happen over the next few years. And I’m not talking about the small, no-name tech companies.
Former industry stalwarts, headline-grabbing initial public offerings and countless more will quickly unravel.
Think Peloton. DoorDash. DocuSign.
I predict that tech darlings just like these could soon fall into bankruptcy … and vulture investors will pick them clean for “parts.”
Just like how PetSmart bought an 81% stake of Pets.com for $30 million, mostly for its URL…
After it cratered from a peak market cap of ten times that amount…
Twenty years from now, investors might remember the highfliers of the 2021 pandemic bubble in similar ways.
But in times of crisis, there is always opportunity. Traders can, and many will, profit from this Silicon Shakeout.
As these companies grind their way toward zero, there will be many countertrend rallies that take the price higher than anyone will find rational.
It’s in these moments of irrational price movement that my subscribers and I, along with my newest trading system, will be ready to strike.
Today, I’ll share exactly how I plan to profit from this trend over the next few years…
And how you can get the precise details of three upcoming trade opportunities I’m about to put my own money into. |  | | In a bull market, you want to buy the best stocks you can get your hands on.
But in a bear market, Mike Carr says you want to trade the WORST stocks.
He’s completed a system that would have returned some exceptional returns in 2022, including a 596% in three weeks following the worst one-day wipeout in any stock in history.
But he says the potential profits in 2023 may be greater, and he’s prepared three trades for folks who tune in January 12.
Click here to sign up for this free event. | 2 Ways to Skin a Dead Cat Bounce Some traders call countertrend rallies in bear markets “dead cat bounces.”
I had a friend in New York, a retired floor trader, who loved talking about this pattern.
He still had an office near the exchange building. He’d often point toward the building across Wall Street, the old Bankers Trust building, and say if you dropped a dead cat from the roof, it would bounce. It would be dead … but it would bounce.
Stocks behave that way sometimes. And when you can spot this behavior, you can put together a highly profitable short-term trade.
There are plenty of ways to skin a dead cat bounce — or rather, make money on falling tech stocks. Two methods tend to come to the top of traders’ minds.
One way to benefit is to buy long-term put options on the stock. Put options rise in value when prices fall. So, it sounds reasonable that a long-term put option is the best choice for a prolonged bear market.
That’s a popular strategy, and it’s used to great effect by some traders, like my colleague Adam O’Dell. But it’s not for me.
The reason is long-term put options are expensive. It can cost tens of thousands of dollars to buy. And even if the stock falls, it might not pay off.
That’s because options can quickly lose value if the volatility in the underlying stock changes. A big enough change means the option can lose value even if the stock falls. Since options can and often do expire worthless, that’s a risk I’m not comfortable carrying for months.
The risks of long-term options are the main reason I prefer short-term options.
These provide every bit the same potential gain as long-term options, but with fewer risks and more frequent opportunities.
This is where dead cat bounces come back into play. If you’re able to pinpoint the peak of a dead cat bounce, you can use a short-term put option to reap massive rewards in a short time.
During the Silicon Shakeout, I expect to see dozens of trading opportunities just like this.
I may trade the same stock every couple months, and always with a short-term strategy.
But I didn’t always have this tool in my belt. It took me years to finally crack it. Not to mention, you didn’t get a whole lot of dead cat bounces during the strongest bull market of all time.
But the bull market is over. And I’ve finally come upon a trading system that does exactly what I need it to, at exactly the right time. |  | | Mike says a new shakeout is coming to Silicon Valley, one that will rival the historic dot-com crash 20 years ago.
But for investors who see what’s coming, it could be the profit opportunity of the decade.
Sign up here for Mike’s free event. | It’s Prime Time to Trade Dead Cat Bounces To return to the dot-com bubble for a moment…
Amazon.com (Nasdaq: AMZN) fell 95% from its December 1999 high. But the stock didn’t go straight down.
There were 16 rallies of at least 5% during that long 21-month decline. Those rallies provided trading opportunities.
Shakeout trades are designed to benefit from dead cat bounces that almost always occur during downtrends.
I worked hard on this strategy. For years, I couldn’t find a way to define rules that capture consistent gains on dead cat bounces.
Then, during the bull market, I invented a trading system I call the Greed Gauge. It was effectively an inverse Volatility Index or “fear gauge,” which could show me moments of peak greed in traders’ behavior.
The rules quickly fell into place. All I needed now was to test it.
I wanted to give this new system the toughest conditions possible. I didn’t have to look far.
The Nasdaq 100 climbed 90% from the pandemic low until the end of 2021. It was the biggest bubble since the dot-com collapse, bar none, and it contained the same type of stocks that moved higher on poor fundamentals. So I ran my back test strategy on the stocks that make up the Nasdaq 100 Index.
During those 20 months, there were 287 trade signals and 61% were winners. These signals indicated there was a high likelihood the stock was ready to decline for at least a couple weeks.
The trades generated total gains of 143%, better than the bubbly performance of the index. That’s after accounting for the losses from signals that didn’t work.
I think that’s important. Shakeout Trades made money in one of the strongest bull markets in history, targeting declines on stocks in an incredibly strong bullish trend. We aren’t going to see another market like that anytime soon.
Now, we’re in an environment where Nasdaq 100 stocks are in terminal decline. There are far more opportunities to trade dead cat bounces on them now than there were before.
In fact, I predict we’ll soon have the opportunity to gain 442%, 564% and even 824% before this summer as the Silicon Valley Shakeout takes hold.
To see how, and learn what to do right now to prepare, click here to sign up for my urgent briefing on January 12, at 4 p.m. ET.
In this upcoming presentation, I share the exact trades that have the potential to gain 442%, 564% and even 824%.
You may have heard something like that before, but I’m serious. No teasing. I’ll give you the actual trades so you can place them in your account and potentially make money right alongside me.
Click here to make sure you can join me this Thursday, and start making more money this year than most traders lost in the bear market so far.
Regards,
Michael Carr
Editor, Precision Profits
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