Postcards: Maybe Biden Isn't Running?

Wait... isn't this supposed to be a finance blog? It is... I'll show you how and why... and an actual way to trade Biden's nomination. Also, why won't markets just tank?                                                                                                                                                                                                                                                                                                                                                                                                                 Forwarded this email? [Subscribe here]() for more [Postcards: Maybe Biden Isn't Running?]( Wait... isn't this supposed to be a finance blog? It is... I'll show you how and why... and an actual way to trade Biden's nomination. Also, why won't markets just tank? [Garrett {NAME}]( Nov 9   [READ IN APP](   Market Recap At around 10:30 am, I noted in the comment section for Republic Risk readers that I warned that the QQQ was going negative. It’s been there since. The SQQQ finished the day up 2.5%. Remember that Friday is the best day of the year for markets, but Jerome Powell again sent a message to markets: “[Close the F——- Door]( Dear Fellow Expat: I told my daughter not to play Gin Rummy against her grandfather this Thanksgiving. It’s the same reason I told her never to play cards with an alligator… You see… She’d lose… each hand. [Upgrade to paid]( Why Won’t This Market FALL? I don’t have much hope in stand-up comedy. But I have a future in explaining why the market won’t drop. And I’m going to explain algorithmic shenanigans as simply as possible. Today was a prime example of why this isn’t your grandfather’s stock market. How is it that the market collapsed two weeks ago, only to reverse with fervor like it did last week? How can we have Equity Signal moves like this (we’re negative today again)? How does a selloff start, only to witness the S&P 500 rip higher 20 minutes later… And then collapse again… As you can see in the chart above, there are a large number of lines surrounding the Blue Line. That Blue Line is the one-minute Volume Weighted Average Price of the S&P 500 SPDR ETF (SPY) - one of the tools we use to track momentum. Well, the market never outright collapsed. It fell into the third range on the bottom - the third standard deviation of price. And once it falls into that level, it snaps back. It does this several times during the day - even though markets are moving lower over the period. Why is it doing this? The answer: Algorithms. Stock market algorithms dominate more than 80% of all trading in the market. This is just a bunch of soulless computers talking to each other. Buying, selling, hedging. And they’re making Billion-Dollar decisions while we’re still trying to figure out how to enter a limit order into Merrill Lynch’s useless trading platform. This isn’t new. I point back to a great interview with hedge fund manager [Stanley Druckenmiller - who discussed this phenomenon in - gasp - 2018](. Druckenmiller used to work with George Soros. Both have an incredible knowledge of market dynamics. Druckenmiller never says that algorithmic traders are bad. But he does explain that they’ve made life difficult for him. You see - Druckenmiller believes that the markets are infallible. He says that no matter how smart you are and how good your idea is… if the market says otherwise, you need to accept this… then move on. That’s a lot to swallow. And if it’s difficult for him, the average retailer trader is in trouble. Machines don’t care how smart you are. They don’t even know you have a thesis. They don’t feel human emotions like pride. They’re not telling dad jokes. They’re making complex, machine-based decisions that are hard for most people to comprehend. The problem is that market signals become very hard to follow because the counter-narrative might emerge in the short term to throw off your thesis. [Back in 2018]( he said this of Facebook’s earnings and price action: “[It used to be] that if a company was reporting great earnings and everyone loved it and the stock didn’t perform well for three or four months, almost inevitably something happened that you didn’t foresee six months down the road. And I’ll never forget about two or three years ago, Facebook had reported great earnings. The stock was like $122, opens at $131 after hours and like three days later it’s trading at $116. So the analysts come in and they’re saying 'nothing’s wrong, it’s great.' I said no, you’re wrong, kid. Something is gonna come out that you just in don’t know yet, something terrible. Anyway, a year later the stock is at $220. So that didn’t mean anything." The problem for Druckenmiller is that price action isn’t what it used to be for traders like him. He can’t generate the 30% gains that he used to for 30 years. A short-term move in price is going in the opposite direction despite what the tape tells him. There’s a reason: Algos. There’s More to Markets Than Price Things are more complicated than ever. Price is not just about going up and down. We need to go deeper to understand how volume impacts price. We have to understand how momentum impacts the broader market. That’s our equalizer here at [Republic Risk Letter.]( We aren’t here trying to guess. We aren’t watching the headlines. We’re following capital in and out of indices and sectors. We focus on directional patterns. And if you follow [the deviation bands as a trade]( you can do well. And if those bands are not for you - good. [Focus on long-term investment]( and use the directional moves of our Equity Strength Signals to learn when to hedge and when to generate income using covered calls and other conservative options strategies. If you have questions, please feel free to let me know below. I’ll talk tomorrow about using covered calls on insider buys. Talk about a great combination. We’ll focus on Black Stone Minerals (BSM) as a prime example of boosting income on a stock you should want to own for the long term. The company just saw another big round of [insider buying from one of its top executives](. Finally Senator Joe Manchin (D-West Virginia) isn’t running for reelection. I’m stunned by this news - because it hands the GOP the Senate seat next year. So, what’s my bet? How do I “trade” this? I’m buying “No” on Joe Biden as the Democrat nominee on [PredictIt.org at $0.32](. And I’ll sell if it hits $0.27. But something’s off here. Based on his swing vote, Manchin is now the most powerful Senator in the United States. Why he’s bailing on Washington at peak powers… I can only make one conclusion. I am speculating that the Democrats are going to try to scrap Biden. I’m willing to lose $5 to win $68. While momentum is negative, it’s a better speculation than betting on Apple… Stay positive, Garrett {NAME} You're currently a free subscriber to [Postcards from the Florida Republic](. For the full experience, [upgrade your subscription.]( [Upgrade to paid](   [Like]( [Comment]( [Restack](   © 2023 Garrett {NAME} 548 Market Street PMB 72296, San Francisco, CA 94104 [Unsubscribe]() [Get the app]( writing]()