Founder's Trading Journal 0 Comment Navigator Algorithm Models – 100% Cash Since you are reading these pages, your morning should be pleasant and relaxing. You should be in cash, excepting perhaps a few of your own, long-term holdings that you hide under the pillow for a rainy day. It is ok to have a few of those, But otherwise, you should be culling your new buy list for the next run in the bull market. I am not quite ready to yield to the dystopian future that both sides promise us if the other side wins the election. One way to enhance your returns is to always challenge every assumption in your arsenal. In a year where everything is topsy turvy, it is not such a bad idea. So I was thinking this morning, what if the financial markets have the election backwards too. Wall Street, being the greedy money-grubbers they are, have contributed mightily to the Biden campaign. Wall Street loves borderless Globalism. Governments can be pesky when it comes to cross border business. The fewer governments (and borders), the better. And as to China? C’mon, man, they aren’t such bad people! Taken together, what if the market has been rallying in favor of a Biden, rather than a Trump victory. Why not? Nothing else has made sense all year? Maybe the market doesn’t favor the lack of change normally associated with the incumbent. Better the” devil you know than the devil you don’t” could be completely out the window this election year. Maybe Trump’s late surge in the polls might actually be driving the market down! Who knows in these crazy times? However, for now, and given 200 years of history, let’s stick with our current model. In that model, we have moved from Trump Strongly Favored to Trump Mildly Favored as the Dow Jones Industrial Average parachutes to its 200-day line. We all know Wall Street talks a good game. It must be quite a dilemma when they get into the Voting Booth. On the one hand, they want open borders and Globalism – it is good for future business. On the other side, do you really think these millionaires and billionaires want to pay significantly higher taxes? I would like to be a fly on that wall when they actually pull the lever! By the way, I drove up to Cheyenne and voted yesterday. The lines were palatable. Of course, I think there are only 550,000 people in the entire State of Wyoming. We don’t need too many police either, as we are all well-armed. In a few dystopian TV dramas, Cheyenne becomes the capital of the Western States Alliance. Things that make you go mmmm.Back to the markets and the business at hand, the S&P 500, our primary market proxy, managed to find support on the “weekly” 21-day line. That is the same line that stopped the August-September leg of the decline. There was enough of a tilt on the daily chart yesterday to keep a triangle consolidation pattern in play. But this morning, it looks doubtful given the vertical nature of the current sell-off. Again, it is highly likely that the 40-week cycle has topped (true confirmation of that would come if we take out the September low. 40 trading weeks and 200 trading days are the same number. Hence a trip to the 200-day line (magenta line in the chart above) is likely underway. The level is 3122 on the S&P 500 futures. Whether a triangle or rectangle, we could be defining a trading range that lasts a long, long time. So let’s continue to enjoy our vacation. We will see how unemployment and third-quarter GDP reports influence the game in the next few days. Fear is rising – as the put/call ratio hit its highest level since June. A solid low is around the corner, albeit some fireworks could accompany it. Once a buy signal renders, you will be the first to know.