Profit Pregame

The One Sector That You Don’t Want in Your Portfolio Right Now

The struggle of the travel industry grows…

American Airlines announced that they would temporarily stop flight routes to 15 small cities across the country. And while to many, this may not seem like a red flag – in reality, it speaks to the devastation that coronavirus continues to bring to the airline industry.

Now, the airline notes that it simply plans to halt service during the October schedule period, which runs from October 7 to November 3. But when you look at the fine print, there are no guarantees that service will ever return to these areas.

The affected cities are Del Rio, Texas; Dubuque, Iowa; Florence, South Carolina; Greenville, North Carolina; Huntington, West Virginia, Joplin, Missouri; Kalamazoo, Michigan; Lake Charles, Louisiana; New Haven, Connecticut; New Windsor, New York; Roswell, New Mexico; Sioux City, Iowa; Springfield, Illinois; Stillwater, Oklahoma; and Williamsport, Pennsylvania.

And these cities aren’t the only locations being impacted. Many small-city airports have seen airlines stop serving their areas altogether. This could create what many refer to as an “air travel desert,” which will make it even more difficult for these areas to bring their economy back to life once the pandemic weakens.

On top of this, due to these shutdowns, American has notified 25,000 workers that they could be furloughed on October 1.

The travel industry continues to struggle, and that’s why I’ll continue to keep my distance from it – and you should too. And instead of chasing an industry with no real “recovery plan” – look into the sector that’s benefitting from the current state of the world – including Zoom (ZM), Home Depot (HD), and Target (TGT).

Trading tip of the week…

This week – my trading tip this week is different than usual, but it’s an important one. And it’s a potent reminder why options are such a viable trading tool.

When you purchase an option, you most likely will have profit targets. These targets will allow you to lock in a certain percentage of gains once your option hits a specific price. Simple, right?

But the great thing about options is that even before they hit that target, they’re still profitable. And this is because options have something called a mark to mark account. This means that as an options goes up in value from $1.00 to $1.20 – even if you haven’t sold the option, your account is higher.

And the same thing is true for the downside. If an option moves down, you’ll notice your account moving down with it.

This is just an important thing to remember as you become more and more experienced with options trading – and it’s essential to remember when deciding to take your profits or leave the trade on for more time.

Earnings report that has caught my eye:

It’s another week of earnings reports.

And I know you don’t have time to be sifting through all the numbers and news.

So, here’s the one I’ll be focusing on, and I think you should too:

The Gap, Inc. (GPS)

Surprised to see a retail stock (that isn’t a big box name) here? You shouldn’t be. Truthfully, I like to keep my eye on every sector, even those that aren’t doing so great.

Now, GPS is scheduled to report earnings on Thursday, and analysts are calling for a dismal outlook – including lower revenue, sales, and earnings per share. And my expectations are in line with the forecast as well.

If these expectations are what we see, we can keep the same plan we’ve had with retail for a while – watching from a distance. But if GPS beats expectations, we could see a short-term pop in the stock price, which could deliver some fast cash if you play it right.

What to do next?

You probably wouldn’t have guessed that GPS would be on my watch list…

But that’s the beauty of my S.C.A.N. trading system.

More often than not, it goes against the conventional wisdom to point out what has the potential to become the next big profit opportunity.

If you’ve kept up to date with the news, a retail stock might scare you away – and justifiably so.

But while other traders move on, the millions of data points analyzed by S.C.A.N. told a different story… we’ll have to wait and see how it plays out.

For more recommendations like this – and a much more 3-dimensional view of the markets – click here now to gain access to my Project 303.

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