Take Profits Before US Election?

The holy grail in trading is finding the sweet spot where fundamentals and technicals collide.

There isn’t a rule book you can follow to find those moments. It is more art than science. But if you understand how momentum changes and can spot the news that sparks a shift in market sentiment, you can reap some quick rewards.

I don’t often blow my own trumpet and prefer to work on the philosophy of under promising and overdelivering.

But a recent trade alert I sent out to my Retirement Trader members was so on the money I have to share it with you.

I sent an alert to enter a gold stock at $2.16 a couple of weeks ago with an initial target set at $2.75.

The stock hit that target six sessions later.

When a plan comes together

I am teaching you a lot about the methods behind my approach in these Closing Bell videos. I don’t give you the secret sauce of course.

I deliberately keep the most important elements of the strategy secret. But if you pay attention you will learn things that most traders and investors don’t know.

If you want to learn how I managed to jump on that trade, I put together a white paper for you outlining the theory behind my analysis of price action.

It is the six key lessons I have learned over my career as a trader.

So, if you want to develop as an investor make sure you check out ‘The Lessons’ when you have a few minutes to spare.

In today’s Closing Bell video, I look at the weird moves we are seeing in US bonds ahead of the US election.

I don’t think anyone thought US 10-year bond yields would jump 66bps after the Fed lowered interest rates by 50bps!

As inflation and now interest rates continue to fall, the rise in US long-term rates is an unexpected spanner in the works. Watch it closely.

I witnessed firsthand the wild swings that occurred after Trump’s election in 2016.

The markets knee jerk reaction was to sell stocks. Then, over the day a massive reversal took place, which saw the S&P 500 have a 7% range on the day and close at its high.

That was the starting gun to a massive rally over the next year.

Many traders lost their shirt that day. My warning to you is this: Do not be one of those traders this time.

Respect the fact that we could witness some wild swings after the election.

The bond market is getting nervous that Trump will lower taxes and continue spending, which will force the government to issue more bonds.

Are we witnessing the return of the bond market vigilantes?

Who knows!

You cannot predict it..

The prudent approach is to take some profits as we head into the election…and fire up the engines afterwards if given the green light.

Trade the market, and don’t let the market trade you!

As I show you today, the ASX 200 is nudging up against a resistance zone based on my model.

There’s no sign of a sell signal yet, so I remain bullish. It’s just something to be aware of as we move forward.

I look at the US 10-year bond yield, the S&P 500, and the S&P/ASX 200.

If you enjoy the video be sure to click through on the YouTube link and press ‘like’. It really helps to get the video in front of more people so many thanks if you make the five second effort.

If you want to learn how I helped members of Retirement Trader to make 27% in six days recently, make sure you check out ‘The Lessons’.

It will give you a crash course in 30 years of trading experience. You will learn how traders’ mistakes can help you to get into no-lose positions.

Regards,

Murray Dawes,
Editor, Retirement Trader and Fat Tail Microcaps