Trading Trump

November 9, 201612 Comments

I view the Trump victory as a trading opportunity. Going into the election yesterday, we raised our cash to 38% and held our 10% silver exposure. We are now buying. I will leg in further over the next couple of days.

What pattern will the market take as it absorbs the reality of a Trump victory? Perhaps the Brexit trade is a good example of what could happen. I’ve posted the S&P 500 chart with notes surrounding that event. I’ve put a line of potential support, should the market start to sell off. However, as I write this on the opening of the market, I don’t see the massive selloff that one might have expected – given the pattern following the Brexit vote. Strange – given the negative moves on overnight futures on the S&P500 as the Trump victory grew closer, then a reality. Then again, the Brexit vote taught investors a lesson – which is to buy on a negative event. Its apparent that these investors are jumping into the market- not wanting to be fooled again. The bargains that were supposedly be present are not all there, thanks to buying by investors. However, there are a few gems that should be considered.

sp

 

Driving the markets up are healthcare (no surprise) and materials. Sectors that seem to be down the most today include utilities, consumer stocks and technology. I’d avoid utilities given their lofty prices and chart levels. But I think there is a good opportunity in technology, and perhaps select discretionary stocks. That, and the Mexican market, for those with the stomach for it.

My thoughts are to get into the market this week, and try to take advantage of sectors that are experiencing momentary selloffs. I will leg into positons based on specific price targets. This morning I sold my inverse ETF, bought 2 tech stocks, and have other plays on my radar. You might want to consider doing the same.

 

bnn

I’ll be on BNN for the 1:00pm MarketCall show this coming Monday November 14th.

Phone in with your questions on technical analysis for me during the show. CALL TOLL-FREE 1-855-326-6266. Or email your questions ahead of time (specify they are for Keith) to [email protected]

12 Comments

  • You mentioned you were buying 2 tech stocks.

    What is your opinion on TXF.TO

    It is a tech ETF with a covered call option. Nice holdings, nice yield, nice technicals.

    Your thoughts? Perhaps a topic for blogging.

    Reply
    • I like the technology sector, and this ETF is a decent play on it. The covered calls offer a bit of income-and some smoothing of returns, which has allowed them to be an out performer in the past year or so-
      If the tech market moves quickly, you get less return because the calls are exercised and the stocks get snatched at lower prices than the stock would have reached without the call obligation. Also, you could give up a bit on the currency, should the loonie continue to be pounded–which I feel it just may —see this blog

      So, lets call this the lower volatility way to play the sector, but the caveat is that this low volatility trade off will limit upside IF the sector suddenly erupts. If the sector more or less trends smoothly, the ETF is a good alternative.

      Reply
  • Al least they have a more market friendly president now in place. We shall see what happens.

    Reply
    • Well the market seems to feel he is market friendly. Mind you, Clinton was in bed with big corporations, so that was thought to be market/ Wall Street friendly too. BTW–This is not a broad based rally (breadth).
      I’m listening to the Munk debate between the two sides that took place before the election. Really interesting–worth hearing it if you get the chance or have the interest.
      https://www.munkdebates.com/debates/US-Election

      Reply
  • Hi Keith,

    Would much appreciate your thoughts on this: You’ve talked about fallen angel Manulife $MFC.TO before, saying that if it cleared 19.00 the target would be 22-23. It looks like you were right, once again. Looking at the momentum with which the TNX is moving up (at 2.10% yesterday) it feels like now is the time to buy U.S banks and insurers.
    – Do you think it’s too late to get in $MFC.TO?
    – Do you think it’s too late to get in $ZUB.TO?

    They both moved so fast. Knowing “when it’s too late” to get in is not something we talk much about, so I’d really like to learn with those as examples. Or only one of those. Thank you!

    Reply
    • Thanks Matt
      There is a big wall ahead for MFC at $23. Can it break through? sure–but the risk is increasing for those who didn’t buy a while ago. We hold the stock in our model, and we did buy at $19. I will play it by ear but likely will want to sell at $23
      Meanwhile–the CDN banks are massively overbought and ZUB is facing technical resistance –plus seasonal trends will change to negative on the banks in a month. Yes, they could break through – and you may have a few weeks of upside. So I’m not outright bearish of course–you cant argue with stuff that is going “up” –but—we are not in this sector. We are wary about its reward/risk tradeoff.

      Reply
  • Hi Keith, gold has broken two support levels, 1250, 1230. What is your view of gold sector? Thanks!

    Reply
    • Gold tends to be weak through the winter from a seasonal perspective so I’d probably say that it isn’t going to be a strong performer over the winter, given the technical breaks you note.

      Reply
  • Keith,
    First of all CONGRATULATIONS to you & your team for the award.
    Q. I hear in the media that President Elect Trump will revisit trade deals & that is -ve for tech sector. I hold msft & qqq & they are down so is xlk after election. Your analysis seems to be +ve on tech sector. My Q is general on tech sector – Will you wait till Jan (seasonal) or are you watching other signals to exit the tech sector & 2 stocks you bought earlier. TIA

    Reply
    • Thanks Muntazir
      I think the tech sector is oversold, largely- and so long as the stocks I hold are on trendline I’ll continue to hold them. However, if the trendlines break and it lasts more than a week, I will pare back.

      Reply
  • CONGRATULATION AS WELL FOR YOUR AWARD. THIS MARKET IS SO HARD TO PLAY AND YOU ARE A PRO (WE ARE NOT!). AS FOR GOLD, STOCKCHARTS SEES A SUPPORT AT $1200.00 AND IF THIS FLOOR DOESN’T HOLD, THEY SEE GOLD RETRACING TO $1050.00. AT THIS LEVEL, XGD.TO WOULD BE BACK TO WHERE IT WAS BEFORE THE RUN UP… AT $10.00 RANGE ! $USD SEEMS POISED TO FINISH THE WEEK AT $100.50 ON THE INDEX… AT THIS LEVEL, IT COULD START A NEW RUN ON THE UPSIDE. GREG SCHNELL (THE CANADIAN TECHNICIAN AT STOCKCHARTS) DOES NOT SEE ANY STRENGTH ON ASIAN, EUROPEAN AND LATIN MARKETS (ALL UNDER 20 MONTHS M.A. MONTHLY CHARTS). IN HIS MIND, CANADIAN MARKET IS NOT BULLISH UNDER 14900-15000 LEVEL. WHEN I LOOK AT CANADIAN STOCKS AND SECTORS, I AGREE… U.S. MARKETS ARE LEFT ALONE IN THIS BULLISH MODE, THE REST OF THE WORLD IS NOT PARTICIPATING. DO YOU AGREE?

    BTW: THE NASDAQ IS NOT PARTICIPATING AS WELL ($NDQ)

    Reply
    • Thanks JP
      On the subject of commodities (gold etc) I just wrote my blog for tomorrow posting–check it out in the morning.
      Its a real sector thing right now. Big rotation. Hard market, for sure. We’ve been largely USD lately–for both the better conditions on the markets, and the currency moves.
      We have managed to deal with the chaos, but I tell ya–sometimes i lie awake at nights wondering whats next!!!

      Reply

Leave a Reply

Your email address will not be published. Required fields are marked *

three × 5 =

Never miss another blog post!

Get the SmartBounce blog posts delivered directly to your inbox.

Topics

Topics

Recent Posts

bitcoin

Bitcoin & Dirty Harry

S&P

The NASDAQ has the greatest risk for correction at this time. 

spx vs 200 day

One sign that the market is overbought

ac

Airlines: A value play?

WTI

Past picks and looking forward

vix vs xlp

Consumer staples should be on your radar

cta-bg

Never Miss an Opportunity

Sign up for our newsletter to receive valuable insights that are available only to subscribers.   Beyond the blog – beyond the videos – get the inside scoop.

Scroll to Top