Market Insights Post-Trump Election: Risks and Opportunities

Steve Van Meter opens the show with an emergency warning, highlighting a significant alert from Bank of America regarding risks for its clients. He emphasizes the importance of understanding these risks and what actions investors should take immediately.

As gold experiences a sell-off with investors flocking to it ahead of the election, Van Meter questions whether it is time for investors to double down on their positions or cut their losses. He promises insights into the future trajectory of gold prices.

The show aims to explore various risks and opportunities in the markets, focusing on technical analysis, momentum, and machine positioning across equity, bond, currency, and commodity markets to enhance trading and investing strategies.

Van Meter introduces Damon Motors, a high-tech motorcycle pioneer, as the sponsor of the show. He announces that Damon Motors is set to make its NASDAQ debut under the symbol DMN on Monday, November 18th, and encourages viewers to check the pinned comment for more information.

Referencing a Bloomberg report, Van Meter discusses Bank of America's warning about a surge in U.S. equity exposure reaching an 11-year high post-election. He notes that a record amount of money has entered the market, with fund managers becoming increasingly bullish following President-elect Trump's victory.

The sentiment among investors has shifted dramatically, with a net 23% now expecting stronger global growth compared to just 10% predicting a weaker economy in the previous month. The proportion of fund managers overweight in U.S. stocks has nearly tripled to a net 29%, indicating a significant change in market outlook.

Despite the bullish sentiment, Van Meter warns of potential risks in the equity market, particularly concerning the souring profit outlook for the S&P 500. He highlights that investors may have become overly optimistic, setting the stage for a possible market reversal.

Looking ahead to 2025, Van Meter discusses the Federal Reserve's likely continuation of easing policies and the implications for earnings momentum, particularly for sectors outside of big tech. He raises concerns about whether this easing will generate sufficient liquidity and growth to support stock prices.

Van Meter emphasizes the importance of corporate profits, noting that profit revisions for S&P 500 firms are beginning to decline, which could temper stock gains in the coming year. He warns that if earnings expectations are missed, it could pose a significant risk to the market.

The discussion highlights the high risk associated with the stock market as President-elect Trump sets the S&P 500 as a benchmark for his upcoming term. Strategists believe that Trump's economic plans will not negatively impact the market. However, there are concerns that earnings may decline, which could adversely affect stock prices. Goldman Sachs reports that corporate share buyback authorizations have reached over $1.1 trillion in 2024, with November historically being the month with the highest execution of these buybacks. They estimate a daily demand of $6 billion in the 19 trading days of November, indicating a potential boost for stocks.

The analysis reveals that machine positioning in the market has intensified after a sell-off the previous week. Following the post-election surge, machines are now heavily invested, with extreme positioning levels. This is critical as any signs of a slowdown in earnings growth or a contraction could trigger machines to sell off stocks, leading to downward momentum in the market.

The S&P 500 ETF (symbol: SPY) shows positive momentum, supported by technical indicators such as the relative strength index (RSI) above 40 and a positive moving average convergence divergence (MACD) cross. The speaker notes eight consecutive daily buy signals, indicating a rare situation of maximum momentum. However, there is a cautionary note that when the market is heavily skewed in one direction, it often reverses, suggesting a potential risk of downward movement.

Looking ahead, the speaker identifies an upside target for the S&P 500 around 600 and a downside target at 575. The market's recent gap up following the election could indicate a reversal pattern, particularly if it gaps down again, which would bring the downside target closer to the 50-day moving average. The speaker emphasizes the importance of volume support and notes that significant support lies at 543, with the next target near the 100-day moving average. The relative strength indicator is showing signs of rolling over, and the MACD indicates that the market is massively overbought, suggesting that any downward movement could have significant implications.

The discussion begins with an analysis of tech stocks, highlighting their role as significant buyers in the market. Despite positive momentum, indicators such as the relative strength index are showing signs of slowing down. The MACD indicator still reflects a positive cross, and there have been eight consecutive daily buy signals, similar to the S&P. However, machine positioning is heavily skewed towards the long side, indicating potential risks in this positioning.

The speaker emphasizes the importance of understanding machine positioning and momentum for trading strategies. They suggest identifying when machines are in substantial short positions or when momentum is deeply short to capitalize on potential swings. A backtest of signals across reports is mentioned, offering a 30-day trial to showcase high-probability signals that could yield profits.

The analysis shifts to QQQ, with an upside target set at 515 and a downside target at 482. The speaker notes an island gap reversal pattern, indicating a potential downward movement towards the 482 level. They reference a six-month volume profile, explaining that trading above this profile is bullish, while a break below could lead to increased selling as traders react to losses.

The focus then turns to small caps, which are expected to thrive under President-elect Trump's second term. Despite positive momentum, the relative strength index is significantly overbought at 73, suggesting too many participants in the trade. The MACD shows a positive cross, and there have been nine consecutive daily buy signals. However, the speaker advises against entering trades at highs, preferring to wait for reversals.

For IWM, the upside target is identified at 244, with a downside target at 221. The speaker warns of a likely reversal, noting similar trends in the S&P and NASDAQ affecting small caps. An island gap reversal is anticipated, with momentum slowing down, and if the downside target of 221.65 is breached, further declines into the 212 range could occur, emphasizing the importance of upcoming earnings.

The discussion transitions to the bond market, where momentum is described as clearly negative. The relative strength index is in an oversold condition at 38, and the MACD shows a negative cross. There have been four consecutive daily sell signals. The speaker advises using stop losses but also discusses a strategy of dollar-cost averaging based on signals, indicating a current decline of over 1.61% in TLT, with a cost basis around 90.

The speaker highlights potential opportunities in the long bond market, cautioning subscribers to remain patient. They note that while the current momentum is negative, historical data suggests that significant opportunities may arise when conditions shift. The upside target for TLT is set at 92.49, with a downside target just below the current closing price, indicating a careful approach to trading in this environment.

The speaker discusses the current market conditions, indicating a high probability of trades and potential for profit. They observe that the support level appears to be holding, with a price rally leading to another bottom. The downside target is set, while momentum is slowly recovering from oversold territory. The six-month volume profile indicates an upside target at 924.9, suggesting that breaking above this level could force short sellers to exit their positions, potentially leading to a significant rally back to the 100 level.

Following Donald Trump's decisive election win, gold has lost some of its appeal as a safe haven investment due to reduced uncertainty in the economy. The speaker notes that many investors had previously invested heavily in gold at peak prices, and now the market is reversing. However, they suggest that gold may still have long-term potential as Trump's policies on taxes and tariffs could lead to higher deficits and inflation, prompting renewed interest in gold as an inflation hedge. Additionally, geopolitical tensions could encourage central banks, particularly in China and Russia, to diversify their reserves by purchasing more gold.

The speaker highlights the current negative momentum in GDX, with the RSI at 33 and sell signals present. They caution against entering trades at this moment, as the market is in a deep oversold position. The focus is on identifying a potential reversal from the maximum short position, which could present a significant trading opportunity. The GDX is currently dropping towards a support level around 33.48, and the speaker advises subscribers to consider taking profits now, as a better entry point may arise soon.

The speaker expresses optimism about the soybean market, noting a recent stop out resulting in a 1.64% loss but emphasizing the potential for recovery. They identify a quad bottom setup, indicating strong buyer interest if support holds. A rally back to 22.26 is anticipated, with a breakout potentially leading to a target of 23.68, aligning with the 200-day moving average. This setup is viewed as a significant opportunity for traders.

The speaker introduces Damon Motors, a sponsor of the show, which is set to premiere on NASDAQ under the symbol DMN on Monday, November 18th. They highlight the company's innovative electric motorcycles, which are designed to enhance safety and performance. These motorcycles feature advanced technology that scans for road hazards, transforms the riding position, and offers superior electric vehicle performance, positioning Damon Motors as a leader in the future of motorcycling.

Damon Motors introduces the Hyperdrive, a patented exoskeleton drivetrain system that integrates a battery, BMS, charger, and inverter into a single watertight enclosure. This innovative design not only serves as the motorcycle chassis but also significantly reduces weight, enhances balance, and requires almost zero maintenance. The Hyperdrive technology allows for more than double the range of traditional combustion super sport bikes on a single charge, making them faster, lighter, and stronger. The motorcycles boast a high power-to-weight ratio, ranking among the world's fastest and most powerful.

The motorcycles are equipped with a six-sense riding system called Co-Pilot, which continuously scans for potential threats using onboard neuronet technology. This system alerts riders through multiple warning mechanisms, including haptic feedback on the handlebars, dashboard alerts, and visual indicators from front and rear cameras, as well as long-range scanning radars enhanced by predictive AI. This 360° advanced warning system aims to make both the rider and the motorcycle smarter, safer, and more connected over time.

Damon Motors' Shift feature allows riders to switch between sport and commuter modes with a simple button push, even while riding, providing an ergonomic transformation that enhances control and reduces fatigue. The motorcycles also offer quick and versatile charging options, compatible with home, road, or track charging solutions. They include built-in level one, two, and rapid CCS charging capabilities, allowing for CCS fast charging up to 35 kW, enabling riders to power their bikes in just minutes.

Damon Motors has completed its business combination with Graffiti Holdings and has been approved for a direct listing on the NASDAQ Global Market. The common shares of Damon are expected to begin trading under the symbol DMN on November 18, 2024. This milestone is seen as a transformative moment for the future of motorcycling, as the motorcycle community has long awaited Damon Motors' public offering. With innovative technologies like Hyperdrive, Co-Pilot, and Shift, the company is positioned to revolutionize two-wheel transportation, allowing riders to become shareholders and participate in the company's success.