When a Wall Street strategist has a strong opinion of the market, that strategist will “pound the table” when publicizing that idea. 

Right from the start this week, “pounding the table” on an imminent rally is precisely what I was doing, in email and platform updates, as well as video lessons such as this.

My week always starts with me sending my Bullseye Pick of the Week and market outlook to members.

This Monday’s Bullseye update contained gems like this, “My feeling is that so much negativity is already priced into the markets and we will actually see things bounce higher” and this “From a technical perspective, the markets are breaking out the descending triangle pattern that was being formed as the bulls are starting to take control at these levels.”

Since those comments, QQQ rallied as much as 7.9% to its intra-week highs.

After such a strong move in such a short period of time, my outlook for the near term has changed.

Let’s talk about it.

At RagingBull, our gurus are never ones to hide when a trade idea doesn’t work out in their favor.

I sure can’t say that about many of our competitors.

For us, every missed or failed trade is a valuable learning lesson for our followers and members because I can assure you it will happen again.

So when that day comes, it’s best to be prepared to know how to handle it.

My Bullseye Pick of the Week this past week is a perfect example of a missed entry that was followed by massive gains that, because I stuck to my proven strategy of waiting for an entry that I feel most comfortable with, I missed out on.

It’s times like these that remind me of one of my favorite Saturday Night Live skits, Hanz and Franz, who famously liked to say, “hear me now and believe me later.”

And that’s exactly what I want you to do right now…listen to my advice now and believe the results when the next opportunity comes.  

Traders who stick to their rules often miss out on some great trades, but the end result is that they have managed their risk and set themselves up for survival over the long term.

You’ve got to shake it off, learn from the situation, and move on to the next trade. 

So what happened with my Bullseye Trade?

Well, given that I was looking for the market to rebound early this week, I picked a company that I knew traded very close to the benchmark S&P 500. 

So I decided on Domino’s Pizza (DPZ).

I knew that DPZ traded closely with the market because I used correlation to determine this. 

That correlation is shown in the bottom panel of this chart, where we can see that the correlation between DPZ and the S&P 500 over the past year (252 trading days) is 0.91, which is really strong.

By the way, if I thought the market was going to be weak, and I wanted to look for a stock to buy, I would have looked for a stock with a weak or negative correlation to the S&P 500, because that stock would be much less likely to be weak.

See how that works?

I also wanted to buy DPZ because, quite frankly, it’s a great company with amazing technology (mainly logistics) that also happens to make pizza that no longer tastes crappy.

They have really stepped up their game in recent years. 

Anyway, the trade entry rules that I presented to members on Monday were as follows: 

My Trade #1 (spicy):

Buy DPZ Calls

Expiration: Feb 11 2022

Strike: $440 

Price: near $8.00

My Trade #2 (mild): 

Sell DPZ Put Credit Spread

Expiration: Feb 11 2022

Strike: $420/410

Price: near $3.00

Unfortunately, the share price never fell low enough to trigger either of those trades, and I missed out on gains in the “spicy” calls that were enormous when the stock rallied 5% earlier this week. 

Again, though, I can’t dwell, I have to move on to the next trade, and that too is what you as a novice trader must also learn to do.

So what’s my outlook for the market now? 

Quite simply, as you look for stocks that may be bottoming as they retest their recent lows, this is definitely not a time to fall in love with these stocks. This is speed dating time.  

To YOUR success!