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RoboStreet – October 22, 2020
Mail-In Election Poses Some Market Risks
The latest tally of ballots having already been mailed in is over 50 million, which is more than three times that of the 2016 election. To think that the current systems in place are going to cope with this surge of mail-in votes is probably being naïve.
Just in Pennsylvania alone, a key swing state, they will accept mail-in votes through November 6 as eligible. Clearly, Election Day has turned into Election Week and could just as easily turn into Election Month depending if the elections are contested.
As earnings season is progressing, the early results are quite encouraging, but the market is not fully rewarding upside surprises witnessed by some “selling on the news” behavior. In addition, there were several large insider sales of stocks by CEOs and other C-Suite executives this past week, taking some money off the table before the election.
And remember we’re not talking about day-trading here. I’m looking for 50-100% gains inside of the next 3 months, so my weekly updates are timely enough for you to act.
The SPY continued to trade in a volatile fashion and retested main support at the $342-344 level on the news about an additional stimulus.
The US Dollar, DXY, was trading in a narrow range with downward momentum.
Most sectors sold off today except the U.S. Dollar sensitive sectors (EEM, FXI, GLD). U.S. Dollar sold off this week which should support the bullish momentum after the elections (end of November/December)
Currently, the key support level is at $340. As long as the SPY is trading above the $342-344 level, I expect the market to retest October highs in the next two weeks.
I would be a buyer using any short-term corrections and use a dollar-cost averaging strategy to accumulate positions at this level. If you are trading options consider selling premium with February and March expiration dates.
Based on our models, the market (SPY) will trade in the range between $318 and $360 for the next 4 weeks, implying some wide swings and heightened volatility.
In light of the nervousness surrounding the election outcomes and the process itself, there is no mad dash to own the dollar as a safe haven. This is notable in that when the investing landscape goes decidedly “risk-off” the dollar trades higher as do Treasury prices.
As it stands, the Dollar Index (DXY) is testing key support at 92-93 and the yield on the benchmark 10-year Treasury note is rising to 8.43%. This is not the stuff of a nervous market, and when the smoke clears from the election cycle, the market will be looking for a vaccine(s) and holiday shopping season to support a move to new highs.
One line of thinking that gets broad consensus is that markets hate uncertainty, and with the prospect of another major stimulus bill being passed at some point, such a huge amount of debt will very likely take the dollar down through support, triggering a new rally in gold.
Within our RoboInvestor Portfolio, our members are long a full position in the SPDR Gold Shares ETF (GLD) to take advantage of higher interest rates, inflation, and dollar weakness. The bull case for gold is very solid and hyper-spending by Congress coupled with ongoing Fed QE only builds further the case for being long gold.
Where my conviction for gold gets a serious boost is when we apply our proprietary AI-driven tools to GLD. Using our Stock Forecast Toolbox, RoboInvestor members can take confidence in how GLD registers with our AI platform. GLD sports a “B” Model Grade with a predicted resistance level up at $217.33. 
Currently trading at $178.70 per share, a move to $217 would represent a 21.6% upside that would rival just about any other asset class performance.
This is where the power of AI really pays off for our members when we get powerful buy signals confirmed by our “always thinking” and “always learning” AI platform. Since we launched RoboInvestor in early 2018, our system is producing a stunning Winning Trades Percentage of 89.94% generating a 50.7% Net Gain to date.
Just in October alone, amidst a very uneven investing landscape, we have booked 10 straight profitable trades. In fact, the last time RoboInvestor absorbed a losing trade was all the way back in March.
When it comes to performance, retail investors deserve the best advisory service available to dramatically reduce risk, book gains consistently, and do so in blue-chip stocks and super liquid ETFs using all asset classes to profit from.
This is what RoboInvestor brings every day – high performance at a very affordable price. Don’t settle for anything less. Make RoboInvestor your top pre-election trade.
“I’m investing my own money in each and every stock as my AI platform identifies.”And remember we’re not talking about day-trading here. I’m looking for 50-100% gains inside of the next 3 months, so my weekly updates are timely enough for you to act.
*Please note: RoboStreet is part of your free subscription service. It is not included in any paid Tradespoon subscription service. Vlad Karpel only trades his own personal money in paid subscription services. If you are a paid subscriber, please review your Premium Member Picks, ActiveTrader, MonthlyTrader, or RoboInvestor recommendations. If you are interested in receiving Vlad’s personal picks, please click here.
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