The market is going to plunge again.
And by the looks of it, the decline is already starting.
You can see below that seven out of 11 sectors (the ones in red) fell last week:
The New Sell-Off Begins
You can start positioning for that today.
For my Chart of the Week, I’m sharing two stock charts.
They’ll show you two stocks you should sell now to cut losses or secure gains before the worst of the recession gets hold of the market.
What’s more, there’s a way to profit from the downside.
My Apex Profit system is firing off “sell” signals.
I call them “buys on red” because I use a strategy that allows us to make money when stocks fall. More about that soon…
Both stocks triggered sells (aka buys on red) in the past two days.
Sell Signal No. 1: Eli Lilly and Co.
Eli Lilly and Co. (NYSE: LLY) is a giant pharmaceutical company that develops drugs for needs including hormone imbalances, depression and anxiety.
A recession will increase the world’s cases of depression and anxiety as well as demand for Eli Lilly’s associated products.
But that barely scratches the surface on what the company offers. Historic unemployment — over 30 million people have filed claims in the last six weeks — will reduce demand across its offering.
At the same time, three metrics show LLY is overvalued. When measured by its price-to-earnings, price-to-sales, and price-to-free cash flow, LLY is trading well above its five-year averages.
This is a big, stable company, but its stock is not immune to sell-offs.
My system tells me this stock is a sell:
Sell Signal No. 2: CME Group Inc.
CME Group Inc. (Nasdaq: CME) is a global markets company. It boasts “the world’s largest financial derivatives exchange.”
Volatility typically means more trading volume, which generates more fees for a company that does what CME does.
It reported good first-quarter earnings for this reason.
But in the long run, lingering uncertainty will keep investors away.
During the 2008 recession, CME’s stock collapsed 80% over 12 months. That’s a big move and a long time. It means bad news for the stock if today’s recession continues to bite down.
My system tells me this stock is a sell:
What to Do Now
If you own either stock, you should be realistic about your investment needs and time frames.
The recession in 2008 lasted for nearly 19 months. If you can’t afford to hold your stocks through a recession that could last more than a year, protect yourself from losses by selling risky stocks and tightening stop-losses.
If you want the chance to make triple-digit gains while the market falls, my Apex Profit system is the best way to do just that.
It gives us “buy on red” signals.
Here’s what that means.
When the system identifies a buy-on-red trade, I recommend that my subscribers buy put options on stocks such as LLY and CME.
It’s a way to bet against a stock without the complications (and expense) of shorting.
The value of a put option rises when the underlying stock price falls.
Plus, an option provides leverage that lets you magnify your returns.
Good investing,
John Ross
Editor, Apex Profit Alert
P.S. If you’ve never traded options before, you’re not alone. Many people don’t even know how to access them in their accounts. Options are one of the best and safest ways to make triple-digit gains in the market. And our options expert Chad Shoop wants everyone to be able to make their own trades. He’s created a Weekly Options Corner to help his readers learn the basics. It’s completely free. All you need is your email address.
