A BULLISH ISLAND REVERSAL, DEBATE AND THE STOCK MARKET, GRIM MILESTONE

Island Reversal

Please click here for a chart of Dow Jones Industrial Average ETF (DIA).

Note the following:

• The chart shows the formation of an island.
• The island formation shown on the chart is considered bullish in traditional technical analysis.
• This island formation was due to short squeeze. Please click here for a chart regarding short squeeze that we previously provided.
• Since the island shown on the chart was formed due to a short squeeze, investors should consider this formation suspect.

Presidential Debate

Tonight is the first presidential debate. To  make money in the markets, investors should consider separating their politics from making money. The objective is to make money irrespective of who wins — Republicans or Democrats.

We are politically agnostic.  Our sole job is to help investors.

Make no mistake, Wall Street loves Trump. The Wall Street consensus is that Trump will do better than Biden in the debate.  If Biden does better than expected, there may be some selling in the market but the stocks that benefit from a Democrat victory may do better.  These stocks include electric vehicle stocks, solar power stocks, infrastructure stocks and health insurance stocks.  On the other hand if Trump wins the debate, expect some selling in the sectors that Democrats favor.

Grim Milestone

Now there are over one million officially reported deaths in the world from coronavirus.  Experts think that the real number is over two million deaths.  The stock markets across the world did not even blink an eye reaching this grim milestone.  Why the disconnect?  The stock market is not driven by empathy or concern for human beings. These days the stock market is driven by money printing and excessive borrowing.  The market is controlled by the momo crowd that does not care about anything other than momentum.

Momo Crowd And Smart Money In Stocks

The momo crowd is 🔒 (To see the locked content, please take a 30 day free trial) stocks in the early trade. Smart money is 🔒.

Gold

The momo crowd is 🔒 gold in the early trade.  Smart money is🔒.

The momo crowd is 🔒 silver in the early trade.  Smart money is🔒 in silver.

For longer term, please see gold and silver ratings.

Oil

The momo crowd is 🔒 in oil in the early trade. Smart money is 🔒.

For longer term, please see oil ratings.

Markets

Our very, very short-term early stock market indicator is🔒 .  This indicator, with a great track record, is popular among long term investors to stay in tune with the market and among short term traders to independently undertake quick trades.

Interest rates are ticking down and bonds are ticking up.

The dollar is weaker.

Trading futures is not recommended for most investors. The purpose of providing this information is to give an indication of the premarket activity that usually guides the activity when the market opens.

Gold futures are at $1888, silver futures are at $23.94, and oil futures are $39.94.

S&P 500 futures resistance levels are 3390, 3420 and 3460: support levels are 3320, 3278 and 3228.

DJIA futures are down 38 points.

Protection Bands and What To Do Now?

It is important for investors to look ahead and not in the rear view mirror.

Consider continuing to hold existing positions. Based on individual risk preference, consider holding 🔒 in cash or treasury bills or short term bond funds or allocated to short term tactical trades and short to medium-term hedges of  🔒 and short term hedges of 🔒. This is a good way to protect yourself and participate in the upside at the same time.

You can determine your protection bands by adding cash to hedges.  The high band of the protection is appropriate for those who are older or conservative. The low band of the protection is appropriate for those who are younger or aggressive.  If you do not hedge, total cash level should be more than stated above but significantly less than cash plus hedges.

It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.  When adjusting hedge levels, consider adjusting partial stop quantities for stock positions (non ETF); consider using wider stops on remaining quantities and also allowing more room for high beta stocks.  High beta stocks are the ones that move more than the market.