Election Week Stock Market Views
Week of November 3
THUR-
Heavy volume on the sell-off. Market’s spooked by the lopsided gov’t. As expected, but didn’t exploit.
Monitor airlines for entry levels (see below). Many charts look like gaps from Tuesday were closed. Only problem is volume expanding across the board. So many charts look terrible, I feel like we’re going to revisit the lows. This is all because the Dem’s came 1 senate seet away from a super-majority. Maybe we will become full-blown, open, French style socialists. Who knows.
Short Looks-
AGU, POT, AMX, BAC (maybe), CRM, FSLR, GENZ, GOOG (monitor), ISRG, PCLN, WLP,
Long ideas-
JPM, QID, SDS, SKF, UNG (lower), UYG (S2 around 7.30/.85), V (inside day on declining volume),
AAPL has huge support at 100. Monitor this for market directional clues.
CHINA:
- Solar and refiner stocks surging on volume. Oil services are exploding. Stay away from coal stocks.
- Airline Stocks are overbought and should pull-in with rising CRB. However, longer term macro is very bullish for this group. So look for a 1-2 day pullback to buy into. Stocks to Monitor:
WYNN- Could continue to 85-88. Look to reverse short >83
X-
tight range contraction just above short-term d/t line. global
production cuts and iron ore output present positive tailwind for
Steel.
AKS- >14 is $14.75, gap at 20.
STLD- Possible target $20-21
BTU: Target 40-44
CHK: Asc. Tri. target = alpha zone $31
CLF: Tradable 4-day broadening pattern but bearish overall.
EOG: If trades above Fri. high, will taget 91.
JRCC- Brokeout, could go to 24-26
MOS- Gap $64-65
ICE- Set alarm < 65
into Wed. Being unaware of MBIA’s calendar is inexcusable. Funny thing
is yesterday, at the close, I realized my size in ABK had exceeded my
comfort zone. Perhaps complacency was the reason why didn’t reduce
immediately. Perhaps this was classic “false start” to what is
ultimately expected in November with regards to market performance.
When it’s all over, if down $30k on the week by Wed.’s close, it’s
manageable. Mon & Tue. had $20k in gains. If by close Wed. total
loss is under $50k, I will call it just a slight bump in the road. If
I’m going to have a “drawdown” after a long streak, it may as well
happen in a single day. Much healthier for the psyche this way. For the time being, all overnight positions are banned. Hypothetically, if a sustained rally is expected, overnight position concentrations are still unwarranted. Smaller size in multiple names is better than concentrated positions in a few names (ala Tuesday night).
Markets gapped down due to economic numbers but snapped back
aggressively. Energy stocks, natural gas specifically, as well as Ag’s,
are ripping higher. Overnight idea was not “wrong”, the execution and
stock selection was wrong. “super majority” was narrowly missed, but it
was getting close near the end. Missed by 1 or 2 seats in the Senate,
so the rally can continue.
WED am:
SPX gapping above prior 2 day high, unable to close gap, then taking
new highs. Charts across the board are showing continuation and/or
breakouts. CRB index looks set for a multi-day rally. Quantitative data
implies November during election year can produce largest single month
gains, with high accuracy. So aggressive long posture is warranted.
Energy & commodity names look good, along with technology and some
financial stocks. Financials appear to have some headwind still.
Airline index could surge higher even though stocks have run. If bank
index rallies early on Wed, it should continue through the end of the
week.
VERY bullish for Solar and other other clean energy names while being
VERY bearish for Coal stocks. This is why solar stocks have exploded
and should continue to rally in November. Likely to outperform broader
market by several factors.
MON morning:
I expect a major crash on Tuesday/Wed. if Democrats take Executive and Legislative branches with super-majority. This looks more and more likely every hour. We could see rally early on Monday, with afternoon sell-off continuing into Tuesday and gapping down huge on Wed. For the short side, focus on double inverse ETF’s:
QID, SKF (trgt 170), SDS (109 trgt), DXD
Go long UNG as macro play for high payoff trade. At critical inflection point ($28-30), first target $35.
Bank Index setting up solid bottoming pattern and showing early strength. Will run to 70. Back up the truck on the financial plays below. Five year tsy yld looks like it has one more push to 3.10. 10yr yld to 4.175% very bullish for stocks. 30yr to 4.45%.
VIX on its way to 49-50
CRB index at major support but still must test 235.
Airline Index breakout thru n/l of inv. H&S but approaching heavy resistance at 28.
NYSE New Lows falling but New Highs not moving yet. Implies upside potential could be huge, or we have one big washout move to the downside coming very soon.
ABK- Stocks at a crucial juncture here. The inv. H&S is compelling but pattern could turn into a sym. triangle consolidation of downtrend. It’s in the middle of a broadening d/t channel. Only save against sym. triangle scenario is fact that prices well into apex of triangle. Move above 2.95 and 3.00 could be the b/o.
AGM- Look for any retrace to establish long. Target $21.
MBI- 2x bottom at S2 will confirm >10.55. 1st trgt 14.50 then $18. Size up
ZION- High short interest with bullish pattern and potential b.o on Friday.
BBT- Size up per volume. Support from 32-34. Target $45.
JPM- On its way to the top end of broadening channel around $51- $53 (SVB similar patter with target 73)
MS- Going to $30
GS- Continue to accum 90-92 target 100-104 then 109-110.
BAC- Targets 27, 29, 33
WFC- Breaking out with huge converging support levels underneath at 31-33. Rally in WB shows expectations of WFC rally from arbitrage players. Target $45
UYG- Headed to $13 (a.z.) then 15.40. Either 2x bottom or inv. H&S w/ S1 & H completed. Expanding vol. on Fri., confirming d-SAR Long trigger from Thur.. Dbl. Long trigger Stoch.
BK- Solid looking inv. H&S. Size up.
V- Closed just below d/t line. ma’s turning up. Monday, d/t line is 55.40 but Fri’s high is 56. Initial buy through d/t line with aggressive accum. above 56.
FIG- Size up, could jump 80% fast.
GROW- Possible S2. Breakout >7.67
HBAN- Support at $8.85. size up target $14
CIEN- Picking up momentum after confirming s/t bottom. First resis. $11.50 then $16. Good risk/reward set-up. Size up on this.
DNA- HUGE support at $80 – $82. Ideal trade to gear up using options. Breakout > 85.25. Accumulate position. Expect improved bid from Roche and possible bidding war. Original offer $89. Likely offer $101.
AAPL- Buy $100-101, moving avg. convergence (24ema & 10sma). Short term rising t/l $96.50
AMZN- Closed at highs on Friday with rising volume. Clear shot to $63. Monitor for test of 54. Next support is 51.
RIMM- Target $65
FSLR- Working on 2x bottom w/ target of 200-207. Buy weakness, especially early morning.
GOOG- Trapped between converging tecnical zones. If breaks down, buy at $336. First a.z. $400, 2nd a.z. $435.
CRM- Continue monitoring for color.
VMW- Next resistance 35 – 37
BIDU- Recover and re-test of 200 complete. Closed above prior support before false breakdown. Target 1: 238 Target 2: 255 (gap and d/t line converge)
CELG- Closed above 3x convergence support @ 64. Target $75
GENZ- Above 74 is major b/o.
SQNM- Try to buy 14-15
SHORT:
CNX at major resistance and d/t line but bullish divergence in breadth.
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