If Trump Wins, I’m Buying Mexico… and 4 Other Thoughts on Today’s Action
Learn to Trade From Our Pros This Week:
Tuesday 9/13: Dynamic Short-Term Trading With Dave Green
Thursday 9/15: Day and Swing Trading Signals You Need to Know – Part 2
(Click here to watch a replay of Day and Swing Trading Signals You Need to Know – Part 1)
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1) Biotech Saves the Day
The first clue that the bull was ready to fight back today was the early rebound in biotech (IBB), which was supported by 3 pieces of favorable news:
- Gilead (GILD) talking its willingness to make more acquisitions
- The HZNP-for-RPTP acquisition
- Hillary Clinton's unfortunate illness. (she is seen as an enemy of biotech, so anything that favors Trump over her supports the sector)
2) Buy Mexico on Trump?
Since Trump's prospects are looking up today, the Mexican peso is selling off, as are Mexican equities.
Given that Presidents tend to moderate once they're in office, a Trump victory could mean a buying opportunity in Mexico once we're past the initial fallout.
The average person may think Trump spells disaster for Mexico. But I imagine that a worst-case scenario would get priced in immediately — courtesy of the same media that sold the Brexit as the end of the world.
So if Trump wins — I am going long Mexico through an ETF like EWW or a closed-end fund.
I'm not making a political endorsement here — I'm just looking for an opportunity.
3) Strong Oil
Crude oil made a beautiful pop off the morning lows after OPEC fractionally increased its global oil demand forecast.
However, the OPEC meeting in Algeria is still a total mystery.
We are still seeing tons of conflicting headlines regarding production freezes or cuts, and there's no telling what will actually happen.
Maybe some confusion is good, because heading into the June meeting, traders were pretty certain that we'd see a freeze or cut, and they were sorely disappointed.
4) VIX Mix
The VIX is slowly grinded lower today as equities penetrates further into the green, which is eating away at my calls.
However, I still think the VIX made a major low in August and it's likely to spike again.
The reason?
Time.
We had 51 days without a real down day, but there's a very good chance the pendulum is swinging the other way.
5) Watch the Regional Banks
XLF started rotten and has made a big turnaround intraday.
I'd watch for more upside catch-up in the regional bank ETF (KRE), which is still off -0.5%.
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