How to Trade in the Biden Era

I keep my politics out of trading.

You should, too.

Everyone spent months analyzing and agonizing over the presidential election and Trump’s antics following his defeat…

But it’s finally over. We have a new president. No matter how you feel about the situation, you should take a step back and keep these important political trading rules in mind…

First, let’s talk about Republicans and Democrats. Republicans are viewed as more pro-business, but BIG stock market booms occurred under Bill Clinton and Barack Obama. The perception of Democrats overburdening regulations in those eras did not hold back stock surges.

Next, you shouldn’t confuse the president’s job with the duties of a business executive. The President is not the CEO of the country. He does not have absolute power to institute policy and must work with other branches for a functioning government. The constitution intentionally limited the impact of any one person…even the President.

Of course, the down-ballot races are extremely important in determining the makeup of the Senate and House of Representatives. The division of government plays a major role in what bills and laws are actually implemented. But predicting these elections or how any of these governing bodies will vote isn’t what pays. The most important thing is how the market reacts. Knowing the winner is not nearly as critical as predicting how the market will behave…

Bottom line: Markets will survive, no matter who is in the White House. Opportunities will continue to exist. History has proven that market resiliency has endured all election outcomes. Our financial institutions are far greater than any single individual that gets elected to run our country.

Keep it In the Money,

Alan Knuckman

Alan Knuckman
Editor, In-The-Money

Trading Tip of the Day: When in doubt, do less.

Greg Guenthner

We’ve enjoyed a huge rally to new all-time highs. In fact, we haven’t seen a pullback of more than a few percent in the S&P 500 since October!

Are we due for a larger pullback? Sure… Eventually… Maybe it starts this week – or maybe the euphoria continues to build.

Right now, we’re seeing tons of stocks streaking to new highs. But great entry points are few and far between. It’s difficult to justify buying overbought stocks if you’re following a sound trading strategy. It might work for a little while. But eventually, a volatile period will suddenly begin and quickly send these names back to earth.

When this happens (and it will!) our first order of busines is simple: Don’t give back our hard-earned profits booked during the previous rally!

Less is more in this kind of difficult trading environment. You’re always better off not forcing trades. Keep your win rate up and take the time to “reset” your thought process. Run some fresh scans to see if any new names pop up. And most importantly, stay patient. The market will reveal new opportunities soon enough.

— Greg Guenthner

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Alan the “Chicken Trader”

I’m back in Chicago this week, where I’m spending some of my free time working on an important project: tracking down an industrial smoker to set up at a local restaurant to promote my Chicken Ribs.

Alan Knuckman

Alan hails from the home of options trading in Chicago, where he began working as a clerk on the floor of the Chicago Board of Trade (CBOT). Beginning with his days on the floor, Alan’s worked with all aspects of the options markets for the past 25+ years.

Transitioning from a clerk to a floor...

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