Well, the countdown is on.
There are precisely six days left until Tesla is listed on the S&p 500. And while many investors and its CEO celebrate such a feat, many worry that this massive powerhouse joining the list could bring even more volatility. And it makes sense seeing that its entry could force the sale of other names in the index as investors and funds make room for Tesla in their portfolio.
The volatile stock has an unusually large market cap for a new member of the index – about $465 billion as of last week (when not counting Elon Musk’s 20% stake.). Now, 17% of that will be in the hands of index investors, but that still leaves $80 billion worth of Tesla will have to be bought.
So, there’s no doubt that Tesla’s addition could cause one of the largest rebalancing the S&P 500 has ever seen. On top of this, Tesla has also never been the S&P 1500, as a member of the S&P 400 Midcap or S&P 600 Small-Cap indices, making investors even more eager to get a piece of this name.
And now analysts predict it could be one of the biggest market on close buy order of all time. Tesla breaking records is nothing new – but I think the volatility it could bring is something we should be aware of. As for me, I’ll be sitting back and watching this development, and I’ll be sure to keep you updated.
Trading tip of the week…
With all the volatility plaguing the market, it’s essential to arm yourself with any and all trading tips to help improve your trading game. So, here’s my trading tip of the week:
You never know when a good trade is going to hit.
When it comes to my trading style, I only trade during the first hours of the day because that’s when we see the meat of the action. Now, this isn’t to say there aren’t opportunities throughout the day – but after my 20+ years of trading, the first hour is just where I’ve seen the most success. With that said, though, it took me some time to get to where I’m comfortable with just trading that first hour.
In reality, one of the top questions I receive from new traders is, how much time should one spend glued to the computer screen, awaiting an opportunity?
And it’s a good question and one I used to ask myself. But truthfully, I hate staring at a computer all day. I trade so I can have the freedom to do the things enjoy. From hitting at the golf range to enjoying lunch at my favorite restaurant, chaining myself to a screen just wouldn’t work. And that’s why planning your trading game is so important.
By planning your trades, from the time you like to trade to the number of positions you’re looking to keep in your portfolio – all of these decisions can help you not only score big but keep you enjoying the process.
So, be sure to dig into what time you prefer to trade. And that’s not to say you can’t periodically check in on markets throughout the day – but know it’s okay to walk away from the screen and do other things you want to do. I believe by striking this balance; your trading will continue to be lucrative and enjoyable.
The earnings report to watch:
We’ve got more earnings reports incoming.
But don’t bother sifting through all those numbers, there’s only one earnings report that you should be paying attention to this week, and it’s this:
Rite Aid Corporation (RAD)
This Thursday, the popular drugstore company will be reporting earnings after an interesting year for the company. With 2,464 locations, RAD is one of America’s biggest drug chains, which is why pharmacy powerhouse, Walgreens, has agreed to pay $4.38 billion to purchase 1,932 Rite Aid stores. Not to mention, the second-largest grocery chain in North America, Albertsons, tried to acquire the Rite Aid brand back in 2018.
So, I’m sure it goes without saying that this earnings report is highly anticipated by many.
RAD is a corporate darling that has been wooed by bigger companies for a long time now. Their previous earnings report of $5.98 billion shattered expectations. And they’re up 11.5% compared to the same quarter last year. And many are expecting another impressive performance this year. With these high expectations and remarkable performance over the previous few years, this stock is the perfect earnings report to watch. So, I’ll be sure to keep you updated.
With Volatility Likely On the Way…
You have two options. You could sit scared on the sidelines…
Or you could work around it, and even play it to your advantage.
I’d personally choose option #2, but if you’re going to try to turn volatility into cash in your pocket, you have to go in with an effective strategy.
That’s why I want to tell you about my colleague Tom Gentile’s “four-day profit cycle” trading method.
With this incredible technique, he’s been helping everyday people multiply their accounts by as much as 10X in as little as 4 months!
Click right here to learn how to put the four-day profit cycle to work for you.
Well, the countdown is on.