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Prepared by StratagemTRADE.com and Scott
Writing under the nom de plume of J.L. LORD

Friday | November 6, 2020

Hello Eizell.

YESTERDAY'S CLOSING PRICES

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YESTERDAY: November 5

SPX 3510.45 67.01

For the 4th day in a row, the market has soared with eagles. More accurately, the market has been flying like Ruppell's griffon vulture which has been known to reach 37,000 feet. We have gained 7.4% since last Friday's close. This, alas, is probably a better analogy of what the market has done since Monday.

WHY, when there is nothing but uncertainty?

No two candidates can be further apart on issues. It is Karl Marx vs Adam Smith. We are looking at higher taxes and big government making decisions for you versus the idealistic (though unrealistic at this point) belief that less government, less taxes and allocating assets for their most useful purpose is ideal.

The market can not find a middle ground to embrace both theories. According to economic theory, one candidate will likely wreck the stock market, and the other will put it into over drive. So why are we screaming to the upside despite it appearing the one who is a negative for the markets is favored (at this particular moment)?

CASH and SENATE

There has been a lot of cash sitting on the sidelines. A second wave of the virus with possibly higher mortality rates (as with the 1918 Spanish Flu) has had some to do with that. The uncertainty of polar personalities and visions for the country has likely kept many in cash as well.

Quantum Mechanics is a strange thing. It states that an atom being moved where you are at can instantly influence an atom at the edge of the universe 13 billion light years away. No one can explain how that is possible as nothing moves faster than light, which means it should take 13 billion years for one atom to influence another (if even true).

Perhaps we have some of that occurring with a Republican Senate? Even if Biden wins the election, any move he makes will have an equal and opposite force exerted by the Republicans. This means nothing gets done, which is great in government compared to the usual disasters they create.

Politicians are great at breaking things, and then telling us that they are the only ones who can fix it. Other than trillions in cash sitting around waiting for good news on the vaccine and elections, perhaps some of the move higher is the markets taking solace that even if Biden wins there is little he can accomplish.

So for the 4th day, the market ran higher with the SPX closing positive by 67.01 points, or 1.95%. Banking stocks are unchanged for the week despite the market's 7% increase, mostly out of concerns of being more regulated. AAPL and travel stocks regained their mojo, and are climbing.

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TODAY – IT IS FU#&ED UP STILL, BUT....

From the day prior to the election until yesterday, the market has run higher by 240.49 SPX points. This is a HUGE gain of 7.4% in 4 trading days. WHY?

We have uncertainty over the outcome of the election. The expected winner of the election has NOT ONE THING that he ran on that is conducive to a strong stock market, and yet we are screaming higher.

Though there is no law that states we have moved as high as allowed in a given time period, yesterday's action near the end of the day felt (to me) as if the northbound train was running out of steam.

I stay awake for 30 minutes a night pondering the market movement looking for the obvious that I am missing. I feel a pause is in the market's run higher is warranted until Wall Street knows which horse won the race, and which is being made into glue.

I am still standing by my prediction (made December 31, 2019) that we will be positive for the year and making new all-time highs by the end of the year. I maintained this stance even when the SPX was down -36% for the year (this has been here since January 1).

S&P 500 Price Limits

From 8:30 a.m. to 2:25 p.m. CST, there are successive price limits corresponding to 7%, 13%, and 20% declines below the previous trading day’s reference price.

From 2:25 p.m. until the 3:00 p.m. CST close of the cash equity market, only the 20% price limit will be applicable.

2020 ONE-YEAR PREDICTION:
Average year with lots of intermittent volatility
(+8.66% so far)

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Continued TURTLE WAX trading. We went home long a $20 wide put spread that will be hedged on the open, then on to the next thing – repeat.

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DISCUSSION BOARD

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Really quickly...

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LAUGH OF THE DAY

Trading is a tough job on a stomach void of coffee and humor.
You provide the coffee and we will take care of the rest.

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