Why A Return To ‘Normal’ Is Good News For Trading Strategies Like This One…
I’ve been telling readers for the past couple of months that we are starting to see some encouraging signs that we are getting back to “normal”.
That is good in many ways. It means that Covid is becoming less of an issue in our lives. But it has important, less-than-good implications.
Here’s what I mean…
By less-than-good implications, I don’t mean bad. For example, I noted last week that when the Federal Reserve announced that it would begin tapering its asset purchases, it was still bullish. In another piece, I pointed out how the Fed’s subtle language shifts could be laying the early groundwork for a rate hike next year.
I just mean we are getting back, in many ways, to where we were in 2019. That’s a slow-growth economy. That’s a stock market where many companies face challenges. It won’t happen overnight, but that’s where I think we’re headed.
That’s good news for strategies like the one we use over at my premium Income Trader service. Each week since February 2013, I have provided my subscribers with low-risk income opportunities that can be used to generate more income in less time than with “buy and hold” investing. And so far, more than 90% of my trades have been winners.
How I’m Trading Right Now
In fact, we recently made a trade on one of those companies facing challenges: AbbVie Inc. (NYSE: ABBV).
ABBV has delivered market-beating performance since it began trading in 2012. That’s largely due to the fact that ABBV sells Humira, one of the top-selling drugs in the world. Humira accounts for about $20 billion in annual sales, more than a third of the company’s revenue.
Sales are expected to grow next year, but, after that, ABBV faces a challenge. Humira loses its patent protection in 2023. Management teams at companies know when patents expire, and ABBV’s team has been working aggressively to meet this challenge.
Recently, ABBV announced that one of its new drugs is making progress in Phase 3 testing while another drug received a recommendation from European regulators for use in that market. These drugs target psoriatic arthritis and combined, they should generate more than $1 billion in sales for the company.
Management is confident that they can replace Humira, and they are balancing shareholder returns with research and development. The stock yields more than 4.5%, an impressive and safe dividend in the current market.
The yield reflects the long-term risks of the company. But that income rewards investors for accepting those risks. Considering those two factors, I believe the stock is attractive for the long term. Investors seem to agree with my assessment. The stock’s price is near its all-time high, a level last seen almost four years ago.
Now, here’s where things get interesting…
Rather than simply buying the stock and sitting on it for a year to collect that 4.5%, we can do better with our Income Trader strategy. Thanks to the simple, proven strategy we use, we can make a trade that expresses our bullish sentiment — and get paid for doing it.
We can identify the ideal time to make this trade thanks to my award-winning ITV indicator. I won’t get into the details today, but think of it as a volatility gauge (like the VIX) – except for individual stocks. As you can see in the chart below, the ITV (red) has crossed below the moving average (blue), meaning ABBV is on an ITV “buy” signal.
Action To Take
If all goes according to plan, we’ll make about 3.5% on our capital in 73 days or less. That’s nearly as much as we’d expect to earn by buying and holding the stock for an entire year. And because this is a short-term trade, we can turn right around and make a similar trade again for even more income.
Worst-case scenario, we may have to buy the stock outright. But I can think of worse things than having to buy a name like ABV at a discount. (In fact, I recommend using this strategy on stocks you wouldn’t mind owning at a discount anyway.)
Trading this way is the closest thing to having your own personal income machine. It’s easy to learn, and you’ll generate far more income than you ever thought possible. In fact, you could easily generate thousands of dollars per month trading this way.