The First Whiff of Panic
A big change from 'Doc' Eifrig... Introducing Advanced Options... Another warning from the yield curve... The first whiff of panic...
Well, it's official...
After more than 12 months of testing and development, our friend and colleague Dr. David Eifrig's brand-new trading advisory – Advanced Options – is now live. And frankly, it's unlike anything "Doc" has ever done before...
If you've been with us for long, you know Doc is incredibly knowledgeable about options. He got his start on the proprietary trading desks of some of Wall Street's top investment banks and has been profitably trading options – and teaching both professional and individual investors to do the same – for nearly 30 years now.
But you also likely know Doc is relatively conservative by nature. So it's no surprise his first trading service (Retirement Trader) was designed to use options to collect safe, consistent streams of income each month.
Now, make no mistake... Retirement Trader has been an unbelievable success, racking up an unheard-of 94%-plus win rate since he launched it eight years ago. It has earned more "A+" grades in our annual Stansberry Research Report Card than any other advisory we publish. And it has earned Doc a loyal following of thousands of dedicated subscribers.
However, Retirement Trader was NOT designed to earn huge returns in a short period of time. To use the old baseball analogy, Retirement Trader aims to consistently hit "singles and doubles" rather than home runs.
But over the years, Doc heard from a number of folks asking him for something different...
They wanted him to use his extensive experience with options to create a more aggressive, speculative trading service. In other words, a service that was swinging for "home runs." And this where Advanced Options comes in...
As the name implies, this service takes advantage of a handful of more advanced, but easy-to-learn options strategies with the potential to turn a small move – or even no move – in a stock into triple-digit returns.
And this isn't just conjecture... As we noted earlier, Doc and his team have been testing these strategies for more than a year now, and they've already racked up an impressive track record. Since last November, they've produced a 65% win rate, good for an average return of 23.3% over just a few months, on average.
All told, these strategies earned annualized returns of an incredible 619% over the testing period. And again, these were real trades – not simply "back tested" results – during a period that saw significant volatility and two separate broad market corrections.
Best of all, you can make these trades on many of the same stocks you're already buying...
You see, every trade Doc and his team recommend in Advanced Options will be based on a recommendation from one of our three most popular advisories: Stansberry's Investment Advisory, True Wealth, or Doc's own Retirement Millionaire.
In other words, each trade is based on a high-conviction idea from Porter, Steve Sjuggerud, or Doc himself. He and his team then create custom options trades to dramatically increase their upside potential without taking huge risks with your money.
And unlike many of our other advanced advisories, this one isn't limited to wealthier folks with large portfolios. In fact, Doc says almost anyone can take advantage of these strategies with as little as a couple hundred bucks per trade.
Of course, regular readers know we at the Digest have grown more cautious on the broad market of late...
While we aren't yet ready to sound the alarm, we believe the risk of a bear market has risen significantly in the past several weeks. So we'd also like to point out that Doc's new service isn't exclusively for bulls.
Yes, Advanced Options subscribers should do incredibly well if Steve is correct and the "Melt Up" resumes. For example, if he recommends a stock that could jump 50%-100% in the final inning of the rally, one of Doc's options trades could easily boost those returns to 300% or more.
But this service isn't dependent on rising stock prices for success.
For example, one strategy Doc will teach you can help you earn 50%-100% returns when stocks do not move at all. That's right... You can actually make money if the market goes nowhere.
And should a bear market show up sooner rather than later, Doc has a strategy that can help you protect your portfolio – and even profit – as the market declines. It's a way to earn triple-digit returns from falling stock prices, with a greater chance of success and less risk than shorting stocks or buying put options the usual way.
To learn more about Doc's new Advanced Options service – including how you can take advantage of a special, limited-time charter offer – click here.
Speaking of a potential bear market...
Regular readers know the U.S. Treasury yield curve is one of several important "early warning" signals we've been watching. In short, whenever the yield curve has "inverted" in the past – that is, whenever short-term rates exceed long-term rates – bear markets and recessions have inevitably followed several months later.
On Monday we noted that the most widely followed measure of the yield curve – the difference between the yield on 10-year U.S. Treasury notes and two-year U.S. Treasury notes, known as the "2-10" spread – had fallen to just 0.115.
While this spread remains above zero for now, it's dangerously close to inverting. And two less-followed spreads – the "2-5" spread and the "3-5" spread – have already inverted, which suggests it's just a matter of time before the 2-10 does as well.
However, this isn't the only worrisome signal the yield curve is sending. You see, it's not just which direction the curve has been moving, but why.
For much of the past year, both short-term and long-term rates have been rising. The yield curve was "flattening" simply because short-term rates were rising faster than long-term rates.
But recently, this has changed. Now, the curve is flattening because long-term yields are suddenly plunging.
In other words, earlier this year, the flattening yield curve could at least be blamed on expectations of higher economic growth. Today, that is no longer the case.
One last thing...
U.S. markets opened sharply lower this morning before recovering most of their losses by day's end. However, during the worst of this morning's decline, the CBOE Volatility Index ("VIX") – the market's so-called "fear gauge" – briefly spiked above 25, something that hadn't happened at any time during last month's decline.
This may be a positive sign. As regular readers know, the lack of fear among investors is one of the biggest reasons we've remained cautious. History suggests a lasting, long-term bottom is unlikely until we see some real panic in the market.
Today's VIX move is a good first step. But we're not there yet. Most notably, our proprietary Complacency Index remains at just 15 this month. While this is higher than the historically low reading of just 8 last month, it's still well below the 30 level that indicates investors are dangerously complacent.
Stay long, but stay "hedged"... and keep a close eye on your trailing stops just in case. This long bull market may have further to run... But we likely aren't out of the woods just yet.
New 52-week highs (as of 12/4/18): none.
The first Advanced Options subscribers have already received access to Doc's extensive library of training and educational materials. If you're among them, we'd love to hear your initial impressions. Please drop us a line at feedback@stansberryresearch.com.
Regards,
Justin Brill
Baltimore, Maryland
December 6, 2018