To gain an edge, this is what you need to know today.
Georgia Election
Please click here for a chart of gold ETF (GLD).
Note the following:
- I am politically agnostic. My sole job is to help investors. This post is about the impact of the Georgia election on investments and not about politics.
- The Georgia runoff election has the potential to have a major impact on the markets over the next year.
- If Democrats win, they will have control of the Senate — borrowing and spending will go through the roof.
- If Republicans win, Republicans will have control of the Senate — borrowing and spending will increase but not as much as if Democrats win.
- In practice, here is the difference between Democrats and Republicans. Democrats always want to borrow and spend. Republicans want to borrow and spend when they are in power but oppose borrowing and spending when they are not in power.
- There are no good public polls.
- From private sources — Democrats are optimistic and Republicans are worried
- The election outcome will likely hinge on the turnout of the black vote in Atlanta vs. the turnout of Republicans who believe that the election is rigged.
- The chart shows that gold has broken above the resistance line with a strong gap up.
- Gold is indicating that Democrats will win and borrowing will go through the roof.
- RSI shows that gold is overbought but there is room to run more. Keep in mind that due to the overbought condition, there can be significant pullback if Republicans win and there is no other news such as the dollar falling.
- The conventional wisdom has been that if Democrats win, the stock market will go down because of higher taxes.
- The momo crowd has departed from conventional wisdom. The momo crowd’s take is that the market will go up if Democrats win, perhaps after a brief pullback because of increased borrowing. After all, the momo crowd has been buying the market on excessive borrowing and excessive money printing.
- Investors should pay attention to the ‘Protection Bands and What To Do Now?’ below. There may be changes as more data becomes available.
Bitcoin
Bitcoin was manipulated to over $34,000. So far Bitcoin has not been able to hold the gains.
New Year Money
Blind money flows into the stock market during the first two days of January. Blind money is the money that investors send to the stock market without any analysis of any kind. However do not get carried away, many hedge fund strategies are likely to sell into the strength.
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 🔒.
For longer-term, please see gold and silver ratings.
Oil
The momo crowd is 🔒 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 up and bonds are ticking down.
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 $1944, silver futures are at 27.69, and oil futures are $48.74.
S&P 500 futures resistance levels are 3800 and 4000: support levels are 3630, 3600 and 3520.
DJIA futures are up 101 points.
Protection Bands and What To Do Now?
It is important for investors to look ahead and not in the rearview mirror.
Consider continuing to hold existing positions. Based on individual risk preference, on dips, 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.
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