To gain an edge, this is what you need to know today.
Election
Here are the key points:
- There was no blue wave.
- There was a red wave in some areas of the country.
- Pollsters were wrong.
- The media was wrong.
- A vast majority of analysts were wrong.
The Good News
There is a lot of good news for The Arora Report subscribers based on what is known so far.
- Arora portfolios are almost perfectly positioned for what is likely emerging from the election.
- No big changes are likely needed for the portfolios.
Mistakes Avoided
Markets move fast, they are complex, emotions run high and there is too much information. It is understandable why under these circumstances a large number of analysts made several mistakes — we can tell know with the benefit of hindsight.
With the benefit of hindsight, the good news for The Arora Report subscribers is that you avoided the mistakes that have been commonplace.
- Selling big tech stocks in entirety such as Amazon (AMZN), Google (GOOG), Facebook (FB) and Apple (AAPL) due to potential blue sweep and regulatory concerns.
- Selling stocks in entirety due to capital gains tax concerns.
- Exiting the stock market completely.
- Buying infrastructure stocks at the last minute anticipating a blue sweep.
- Buying marijuana stocks at the last minute at high prices in anticipation of a blue sweep.
- Buying Green Deal stocks right before the election.
- Aggressively selling Republican stocks right before the election.
- Positioning portfolios for a Trump landslide or a Biden landslide.
- Selling emerging market stocks.
- Short selling the dollar.
- Aggressively short selling stocks.
Two Charts
Please click here for a chart of Nasdaq futures (NQ_F).
Please click here for a chart of S&P 500 futures (ES_F).
Note the following:
- We understand that many investors are uncomfortable with futures. This is the reason we normally use charts of ETFs.
- The reason for using future charts is that they were trading all night.
- The first chart shows good news for tech early in the night.
- The first chart shows that tech stocks stayed strong throughout the night and the pullback was shallow.
- The VUD indicator is the most sensitive measure of net supply demand in stocks in real-time. The orange indicates net supply and the green indicates net demand.
- The first chart shows that net demand for stocks has increased as the morning has progressed.
- The second chart looks about the same as the first chart. However, a closer examination shows that the demand for stocks is mostly focused on the tech stocks as of this writing.
- Infrastructure stocks are being sold in the early trade.
- Marijuana stocks are being sold in the early trade.
- Bank stocks that ran up on expectations of a blue sweep are being sold.
- Oil stocks are being bought.
More On The Election
We will be providing more analysis as appropriate.
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 🔒 in 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 down and bonds are ticking up.
The dollar is slightly 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 $1909, silver futures are at $24.13, and oil futures are $38.54.
S&P 500 futures resistance levels are 3420, 3460 and 3520: support levels are 3390, 3320 and 3278.
DJIA futures are up 46 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, 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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