Patterns are the secret to my continued success as a rules-based trader. To find those patterns, I use my go-to system, the Money Calendar. If you’ve been following along with my recommendations, you’ve likely had hundreds of chances to profit from it yourself.
The Money Calendar scours 20 years’ worth of pricing data on 250 of the market’s best stocks to find the ones that reliably move up or down during a particular time of year, the whole year round. Historically, this system produces profits 90% of the time.
Now that we’re coming up on Labor Day, I’m watching some patterns I see every year around this time.
So I’ve got two trades to put on today – right now, in fact – that should pay off before mid-September. You really do have to move quickly, though…
Cash In on the End of Summer
The three-day Labor Day weekend is time for traveling and eating; Americans hit the road and take to the air, they chow down at barbecues and other get-togethers, and they spend big to make it all happen – they spend the kind of money that moves stocks.
And the most consistent group of stocks to move are the airline stocks – these companies have been “in play” since the recovery began, and surge or not, they’re still moving.
One of the most consistent trends, though, is airline travel. Many people wrap up their summers with vacations over the three-day Labor Day weekend.
And the Money Calendar is showing me strong historical patterns on America’s two biggest airlines right now – you can see what the Money Calendar does here…
These Stocks Have Moved Profitably 90% of the Time
International airline American Airlines Group Inc. (NYSE: AAL) moves in a very compelling pattern around Labor Day – compelling if you like making money. Over the past 10 years, AAL has risen a whopping 8.3% from the 10 trading days prior to Labor Day through seven trading days after. Ninety percent of the trades were winners.
Drilling down into 10-year performance, you can see that in 2019 and 2020, AAL shares rose 13.5% and 10.9%.
The sole loser – the “down” year of this entire 10-year stretch – was in 2014, when shares dropped 2.59%.
The other major airline at work here is United Airlines Holdings Inc. (NYSE: UAL). It also has a history of moving up, up, and away. Over the past 10 years, UAL shares have risen an average 8.98% from 10 trading days before to eight trading days after Labor Day. Like American, nine trades in 10 were winners.
Last year, UAL rose 13.9% over this period.
So, now that we’ve established the patterns are there, we need to set up some trades.
It couldn’t be easier…
Here’s How Play AAL and UAL
You can buy and hold these stocks for a high probability of double-digit profits, but you’ll find trading these is even more profitable; you can greatly increase your return on investment and slash your costs, to boot.
The catch is, you’ve got to move fast; this pattern just went “live,” so there are just nine sessions left before Labor Day.
Here are some basic rules of thumb:
Buy UAL and/or AAL call options. Make sure their strike price is at-the-money (ATM), or closest to the current price. Select the first option expiration date after you intend to exit the trade.
With both AAL and UAL options, you’re entering the trades nine trading days or “sessions” before Labor Day and exiting the trades seven trading days after.
With Labor Day on Sept. 6, our entry date would be Aug. 24, 2021. Our exit date – when to sell the options – would be before the market closes on Sept. 15. The at-the-money options would expire on Sept. 17, but you should be counting your profits by then.
I think your experience with these options will show you just how potentially profitable these identifiable patterns can be. And not just on Labor Day, either – they can occur all year round. I’m always watching the Money Calendar, and when I spot a pattern I think could be lucrative, I let my subscribers know about it through my Fast Fortune Club. To learn how you can get ready before my scanner detects the next opportunity, just click here.
Follow Money Morning on Facebook and Twitter.
Join the conversation. Click here to jump to comments…
About the Author
Browse Tom’s articles | View Tom’s research services
Tom Gentile, options trading specialist for Money Map Press, is widely known as America’s No. 1 Pattern Trader thanks to his nearly 30 years of experience spotting lucrative patterns in options trading. Tom has taught over 300,000 traders his option trading secrets in a variety of settings, including seminars and workshops. He’s also a bestselling author of eight books and training courses.
… Read full bio