Three (Profitable) Things to Watch Right Now

Want to get strong? Lift barbells.

Want to get rich in an economy like this one? See above.

A few weeks back, I mentioned the notion of a barbell-like trading strategy. It’s an idea I first wrote about in the aftermath of the 2008 catastrophe.

The idea is simple…

On one side we have ultra-short-term trades that take advantage of a chaotic market’s ups and downs. Just yesterday, in fact, I introduced Alpha Money Flow subscribers to a trade that will last less than a month. We’re playing the downside of an internet stock that faces a slew of obstacles.

On the other side, we have what I’ve talked about so much in this column… long-term opportunities (like startups) that will ultimately see this downturn as a blip.

When we combine the strategies, it’s like getting a weekly paycheck while you wait for that big inheritance to come in.

And as we approach what will surely be yet another hugely volatile earnings season, it’s vital that you don’t miss out on the many, many short-term opportunities that surround us.

We’ve covered startups and crowdfunding plays in depth. Right now, it’s vital you understand the short-term side of things.

Here are some key numbers to keep in mind as we consider our next moves…

Profit Opportunity

As I write, the consensus belief is that S&P 500 sales will show a double-digit jump from last year’s second quarter. The estimate is for a 10.4% surge in revenue.

But that’s a bit of a misleading idea.

When we subtract the boom in revenue for the oil and gas sector (thanks to $100-plus oil), sales are expected to drop by 2.4% year over year.

Even with the decline, bottom-line growth is expected to come in just north of 6%.

That’s an absurdly high figure. It creates a lot of room for downside plays as companies start issuing reports that don’t show that sort of profit growth.

Really, the thing to watch over the next few weeks isn’t just the numbers… it’s what management has to say about it all.

We’re about to get some very candid commentary from executives.

Talk of recession… inflation… and even restructuring will be a recurring theme during earnings calls. Just a few bearish words could send shares moving south in a hurry.

In fact, it’s quite likely the outlooks portrayed on these calls will have more effect on short-term share performance than the numbers from the previous quarter.

That means… if you’ve never tuned into one of these quarterly calls, now is the time to start.

But, of course, every major analyst covering the stock will be on the call listening, too. And while it’s your chance to hear the news at the same time he learns it… the market will already be moving before the CEO finishes his sentence.

That’s why it’s important to do your due diligence now.

There are a few ways to get a head start. Follow these simple steps, and you can get into the companies that are likely to show the biggest moves after dire talk during their quarterly conference calls.

Getting Ahead

First, play the dollar.

The greenback has surged nearly double digits versus its global competition this year. That’s a huge move.

It’s not good news for companies that make a lot of sales in foreign currencies. If a company earns billions in euros, it needs to convert that cash back to dollars to pay its bills and reward shareholders.

Converting back to dollars is more expensive than it has been in a long time.

For big multinationals… this will be a hot topic over the next few weeks.

Of course, there’s inflation, too.

This one will cause just as many downside opportunities as upside. The mainstream headline writers haven’t caught on to the idea all that much, but key prices are falling… and falling hard.

Corn, wheat and soybeans are well off their highs. The world’s industrial metals have fallen, too.

Companies that sell these goods won’t have great things to say – despite the fact that many investors are still pouring in. But companies that use them are almost certain to surprise to the upside.

There’s big opportunity there.

And, finally, focus on the almighty consumer.

We’re already seeing a trend away from discretionary spending. Folks are holding off on buying new cars and are instead putting that money toward groceries and soaring rent.

The trend has hardly gotten started. It’s not likely to show up all that much in earnings reports. But, oh boy, it’ll be a conversation during earnings calls as the top brass at “ultra-discretionary” firms give a dire warning that spending habits are changing.

Think of “ultra-discretionary” companies as the folks who make expensive midmarket products… RVs, boats and even vacation operators.

That “midmarket” idea is critical. The upper crust hasn’t cut back. Yacht makers are still plenty busy. It’s the blue-collar fella next door who may not be buying a new bass boat this year.

Add it all up, and there is ample opportunity to make some fast, in-and-out trades.

Don’t touch your long-term holdings. Selling now is crazy.

Instead, focus on the other side of the barbell. Get in. Get out. And take advantage of what will surely be an earnings season to remember.

I’ll keep you up to date.

Be well,

Andy

P.S. For those interested, I just added a bear market portfolio to one of Manward’s most popular services, Alpha Money Flow. In it, I’m detailing my new “sniper” trades, which use a variety of techniques to make money when stocks fall. If you want in on these trades, give our team a call at 844.201.1980 or 443.541.4636.