I'm continuing with my recent bent of positioning carefully in speculative names that have the potential to rip if the market resolves higher out of this Washington nonsense.

Today's trade is in a name that is showing signs of squeezing higher. It just needs a spark.

Let's get right to it.

Headlines.

We all read them and they mess with our heads. It takes steadfast resolve to listen to the message of price action when everything else we read tries to trick us into doing the wrong thing.

The best way to keep ourselves level-headed when taking risks is to define that risk and trade small. There are few things more powerful than knowing with complete certainty the most I can lose, no matter what the market throws at me.

With this in mind, we're putting on a trade today in a stock that has the potential to be a real highflier if the markets stabilize and head higher following any Washington drama while limiting our risk in case we're early or wrong.

It's a bull market, in case you haven't heard.

As such, I'm on the hunt for alpha. I'm looking for stocks that might be off the radar, but can have outsized moves when the market runs.

Today's trade offers this potential in spades.

[9/7: stop moved to 260. We're already #FreeRiding on this one. So whatever we sell the remaining position for is pure profit!]

Today's trade leans against a significant support level that we believe will hold. But because the stock is at such a delicate level where it could quickly collapse on us if the level doesn't hold, we're going to keep the play simple and cleanly define our risks.

A picture is worth a thousand words, so here's the chart of Caterpillar $CAT that's got our attention:

[9/28: updated our stop to $34]

I'm filing today's trade under the category of "Hard Trades." Not because it's particularly hard to execute or because it's a complicated multi-legged spread. It won't require an excessive amount of margin to get positioned nor is there any risk of unlimited losses.

It's hard because people might look at the trading action of the past few days and think that it's "gone too far" and "I should wait for a pullback."

And traders who think that way may be right.

But here's the thing: sometimes the best trades to get into are the best precisely because they are the "hardest" to pull the trigger on. And that's where our opportunity is. Those of us who fight through the conventional wisdom of average traders and get positioned ahead of the crowd will be lifted later on by those same traders who were "waiting for a pullback" and put an ever-rising bid underneath our stock that fuels our future gains.

Today's trade might be one of those setups.

[9/7: updated stop to 180. We're already #FreeRiding, so whatever we sell for is pure profit!]

It's time for the small caps to make a stand. The time is now. If they don't, it could be 'goodnight' for a long time.

JC posted earlier this week about the Russell 200 index and had this to say:

We’re back to a key level of interest for Small-caps on an absolute basis. And we’re back down to historic levels relative to Large-caps. The chart tells a very powerful story.

I’m a buyer down here.

If the Russell2000 is above last Summer’s lows, I will be long the $IWM ETF. I also think there will be plenty of opportunities this summer in small-cap stocks.

We talked about $IWM internally this morning and I suggested a good, levered way to play this thesis while honoring a nearby risk management level that will get us out of the trade without much pain if we're wrong.

But first, here's the chart of $IWM:

Full Disclosure: I'm a Buffalo Bills fan. As such, I'm excited about this upcoming NFL season. This is the year! Does this fact color my interest in today's trade? Maybe.

I get all my speculative juice in the financial markets. But there is a growing number of Americans who are jumping into online sports betting. The increases in both participation and dollars wagered is skyrocketing.

Today's trade is a bet on a continuation of this trend that will likely be driven by the next NFL season.

Options premiums have risen a little bit in recent days due to the fed, earnings, government data, and trader indecision, and [insert your favorite scary story].

Whatever the reason, this feels like a good time and opportunity to add some delta-neutral positions to my portfolio.

So let's get right to it.

[10/19/23 Update: moved stop to 125]

If stock markets are about to recover and start another leg higher back towards all-time highs, I have a hard time imagining a scenario where Google (Alphabet) $GOOG doesn't at least retake last summer's highs north of $123 per share.

Call me crazy, but that's where my head's at.

Take a look at the coil that $GOOGL is working through right now:

The $GOOGL and $GOOG charts look the same. It's confusing and annoying that they have two shares classes (the "L" shares come with voting rights, the others do not).

The GOOG options have more open interest and volume, so that's where we will put on our trade.

As we're starting to get the latest round of earnings reports into the rear-view mirror, we're getting some clarity on the next crop of leaders for a potential move higher in the stock market.

Today's trade is on an emerging leader in the Defense sector that positions us very offensively for the next move up.

Let's get to it!

The next new position in our Paid-to-Play portfolio is: