Post-Election Stock Market Update
Updated: Nov 5, 2020
The market has been showing strength the past few days, despite the still unofficial declaration of a winner of the 2020 Presidential Election. Even without one candidate reaching 270 electoral votes yet, the market is appearing to be pleased with the idea of a Republican Senate and a Biden presidency.
From a technical standpoint, the market looks like it has been basing after a very strong run up off the March lows. This can be considered normal action after such a large rally. It will be interesting to see if the market can break out to new highs or whether it needs some more range bound action before resuming a strong uptrend.
Going into the election, I raised cash and held onto some of my strongest positions, including Nio, Bidu, and JD. I took profits in Nio this week to lock in my gains and to avoid too much exposure in correlated stocks.
Bitcoin continues to rally strongly and is now trading at 2018 levels. I'm still holding it and my shares of GBTC as I want to give this position time and room to play itself out.
It killed me last week to sell Plug Power (PLUG), but I felt the risk was too high to hold it below the 50-day moving average. Fortunately, I was able to reenter into a position yesterday and it seems to be acting well so far. Sun Power (SPWR) has also been on my watchlist for quite a while. I really like the large move it made out of a huge base and its' very orderly pullback over recent weeks. I opened a position yesterday as it hammered off the 50-day moving average.
Tesla, like Plug Plower, was on my watchlist for another buy after selling it below the 50-day moving average. The low volume on the weekly chart caught my eye. It's always nice to see such little selling on a stock that has already had a monster year. I bought it earlier today with a stop loss below the 50-day moving average.
We also saw some positive news from the Fed, with its' decision to hold interest rates near zero. Fed policy can have a major impact on the market and it's always good to have the wind at our back. There still is headline risk with a president still not determined and I can definitely see a scenario where the market remains range bound as the 200-day moving average catches up, but as long as my buys keep working, I'll remain bullish and look to add more positions as setups develop. I'll keep it as simple as that.
Charts curtesy of Ninja Trader.
Full Disclosure: I own BIDU, JD, TSLA, SPWR, Bitcoin, GBTC, and PLUG.
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