Shares of Apple Inc. (NASDAQ: AAPL) have rallied 20% higher in just 28 days.
Although you should not be buying into this bull rally, there’s a good reason why it’s happening.
AAPL has been one of the driving forces behind the Nasdaq 100 as investors have been doing one thing – and one thing only: looking for a safe haven in this volatile market.
But they’re not moving into traditional volatility hedges like utility stocks and dividend yields because they remember what happened last year during the pandemic.
Big tech stocks like Amazon.com, Inc. (NASDAQ: AMZN), Intel Corporation (NASDAQ: INTC), Cisco Systems, Inc. (NASDAQ: CSCO), and of course AAPL put the entire stock market on their backs and carried it higher.
The big rally we’re seeing right now in AAPL is nothing more than a Pavlovian, knee-jerk response to the recent volatility as investors rush back into what they believe is a safe stock.
But just like Sir Isaac Newton discovered, the higher the Apple goes up… the harder it hits your head.
Which is why today, I’m going to show you how to make money when Apple inevitably drops back to reality.
Here’s how to make money on a falling AAPL…
When the Russell 2000 ETF (NYSE: IWM) rallies higher, this means that the “risk on” trade is going strong and we can expect a bull market.
That’s because speculation, not fundamentals, is what drives stocks higher.
Today we see that the IWM is once again breaking below its 50-day moving average, which means the “risk on” trade is turning off.
This means buyers are not entering the market and my charts show me that the $220 level is the target right now.
If the IWM is unable to hold this level we may see a broader market decline that seeps its way into the S&P 500, the Nasdaq 100, and the Dow Jones Industrial Average (DJIA).
From a seasonal perspective, we’re right on time for stocks to drop.
We’re currently in the first week of earnings and historically, the second week of earnings tends to be weaker.
There are a lot of warnings written on the wall that we must prepare for a steep pullback.
Last week, I showed you how to hedge your portfolio and make predictable profits at the same time.
But today I’m going to show you how to make aggressive profits from this market decline by using put options.
Here’s how to make money when the market starts dropping…