I’ve been talking about my “magic pattern” lately… and how, going into 2025 and beyond, I believe the coming market chaos will hand us many opportunities to exploit this pattern over and over for excellent gains.
Like 26% in just two trading days… 152% in six trading days… and 97% in eight trading days.
So today, I thought I would take you deeper into how it works, with a trade that helped readers of my entry level trading service Jeff Clark Trader make over 200% gains… in just six trading days.
Simple Method, Repeatable Results
It’s simple, really… the “magic pattern” system looks for stocks that have moved far away from their moving averages and are set up to snap back to them.
I’ll take you through an example, using my all-time favorite stock to trade – the VanEck Vectors Gold Miners ETF (GDX).
I probably do 10 to 15 trades a year on GDX… and an interesting thing about this fund is that if you had bought it when it came out originally in 2006, it was trading around $37 a share.
Almost 20 years later… it’s trading around $37 a share.
So if you had bought it and held onto it for the length of time it’s been in existence, you’ve actually made… less than nothing, taking inflation into account.
But it is one of the best vehicles for trading, and I’ll show you with an example that set up way back in February. Check out the chart below…
What I liked about this particular pattern is the blue dashed lines creating a bullish falling wedge pattern.
If you’ve read Market Minute for any length of time, you know I like these bullish falling wedge patterns.
There’s the resistance line of the wedge at the top, there’s the support line of the wedge on the bottom.
Now the reason I really liked this setup isn’t just because of the pattern…. But also because of the risk/reward situation.
A Really Favorable Setup
So GDX made a low just above $25 a share last October. And so if we were buying the stock, we’d be buying it around $26.
We would be looking at a dollar’s worth of risk to the downside. On the upside, if we’re right and the stock moves out, a big blast higher out of the wedge probably targets the $30 line in early 2024.
So we’re looking at $1 worth of risk if you buy the stock at $26 and $4 worth of potential reward. And if this really kicked into gear, we could see it all the way up to the top of the wedge, which would give us $6 potential reward.
I recommended readers buy the April $26 calls for 90 cents on February 27.
Less than two weeks later, we had this nice little pop:
So this bullish falling wedge played out as we thought it would by popping to the upside.
The stock rallied all the way up to $29.16, where I told folks to take their profit… for 222% gains in just six trading days.
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You Can Do This Too
This isn’t luck… it’s a system that I’ve carefully created through my 42-year trading career.
And if it seems hard, don’t worry. You can learn more about the Magic Pattern right here.
I’ll guide you every step of the way.
Best regards and good trading,
Jeff Clark
Editor, Market Minute
P.S. If you have any questions for me, be sure to send them to feedback@jeffclarktrader.com. I read every message that comes in.