Vaccine And Trade Deal

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

Note the following:

  • Previously there was good news on the vaccine from Pfizer (PFE) and BioNTech (BNTX).
  • Now there is more good news from Moderna (MRNA).  MRNA vaccine is 94.5% effective.  Moreover, this vaccine does not need the extreme cold temperatures required by PFE vaccine.
  • China has scored a major success by persuading 14 Asia-Pacific nations to sign its trade deal.
  • The U. S. has been left out of the trade deal.
  • The China trade deal is a big positive for China and a big negative for the U. S. A.
  • The chart shows the stock market reaction to the vaccine news.
  • Notice that this time the reaction is mild compared to the last vaccine news. This indicates that market participants were expecting this good news and most of this news was already discounted.
  • As of this writing, the market is above the line marked ‘Magnet’ on the chart.
  • Overall the pattern that is being traced is positive.

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 slightly 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 $1882, silver futures are at $24.50, and oil futures are $41.79.

S&P 500 futures resistance levels are 3630, 3800 and 4000: support levels are 3600, 3520 and 3460.

DJIA futures are up 438 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.

This post was just published on ZYX Buy Change Alert.

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