To gain an edge, this is what you need to know today.

Reduce Cash And Hedges

Both cash and hedge levels are being reduced.  It is best to make the transition in several steps — some now and more on the dips.

Vaccine

Vaccine data from Pfizer (PFE) and BioNTech (BNTX) has shown 90% efficacy.  FDA has been willing to approve efficacy of 50%.  Most expectations have been for efficacy of less than 70%

The news is much better than expected.

Many hurdles still remain.

Breakout Above The Magnet 

Please click here for a chart of S&P 500 ETF (SPY) which represents stock market benchmark index (SPX).

Note the following:

  • The chart shows the magnet that has been attracting the traders.
  • The chart shows that stocks have jumped above the magnet on the vaccine news.
  • The next magnet for traders will be the trendline shown on the chart.
  • RSI has jumped into the overbought zone however the news is simply too powerful.  Any dip is likely to be a shallow dip and should be considered an opportunity to buy.
  • The chart of popular stock market index Dow Jones Industrial Average (DJIA) is showing strength.  The chart of Nasdaq 100 ETF (QQQ) has pockets of weakness as stay at home stocks may be sold.

The Good Way

Investors who normally follow the Best Way but are aggressive may consider scaling in small tranches using the  Good Way and Buy Now ratings.

Nibbling

Consider nibbling on select stocks and ETFs on dips.

Model Portfolios

Model Portfolios were updated yesterday, we will be sending you new updates shortly.

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 vaccine is bad for gold.

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

For longer term, please see gold and silver ratings.

Oil

The vaccine is good news for 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 stronger.

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 $1870, silver futures are at $24.10, and oil futures are $40.60.

S&P 500 futures resistance levels are 3520, 3600 and 3630: support levels are 3460, 3420 and 3390.

DJIA futures are up 1736 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.

 

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