Shah Gilani's Archive

No, I haven’t lost my mind, and no, I’m not blindly bullish. I’m bullish for good reasons.

Yesterday, another prospective positive for the stock market landed on my desk in the form of a report from the New York Fed on what consumers did with the stimulus checks they got and what they’re saying they’ll do with the next check(s) when they get them.

Here’s what the report said, why it’s bullish, and two stocks to buy right now to play the news…

With only 22 days left until the election of maybe a lifetime, equity markets, as nervous as they were, are now almost irrationally exuberant.

And while equities may get tested this week because of everything that’s going on, the tone and tenor of the market is bright and strong.

But, we’ll see how that holds up when third-quarter earnings reports start rolling out…

Here’s what to look forward to last week, and later, I’ll show you

You’ve heard analysts, and financial gurus, and pundits say, “The market just wants to go up,” which makes the market sound like it’s a living, breathing thing and makes its own independent decisions.

Well, it is. The stock market is, in a very real sense, a living, breathing “thing.”

That’s because the market’s made up of traders and investors, and you better believe they make their own decisions, even when those decisions are more dependent than independent, as they are now.

And right now, the market is telling us something, and for your money’s sake, you better listen…

If you’re worried about negative news stories tanking the stock market, you’ve got a lot of company.

Investors are worried about what virus spikes and more shutdowns, if not lockdowns, will do to stocks.

They’re worried that companies laying off workers by the thousands means their earnings are faltering.

Everyone’s worried what will happen to the market if there’s no “stimulus” bill passed this year.

They’re worried about a contested election and how markets will deal with that.

And investors are worried about what a reconstituted Congress might do to kill the bull market.

Me, I’m not worried because there’s another side to every coin and every negative story.

Here’s the heads-up on the other side of the bad news, and what’s good for the market.

The Dow rose 508 points, or 1.9% last week. The S&P 500 rose 1.5%. And the Nasdaq Composite rose the same 1.5%.

That’s what I call a bullish week, not because it was a rah, rah run for the high ground kind of week, simply because we ended the week up when we easily could have slid backwards.

We rose on uneventful volume, to be sure, but we rose.

Proof that it was a good week and that bulls are ready to breakout of their corral and maybe stampede higher was especially evident on Friday. After futures pointed to a hellish day ahead, on the heels of the President seen headed for the hospital on Thursday, once the market opened, buyers came in.

It wasn’t a “good” day Friday, but it easily could have been an ugly day. Instead, we saw how willing buyers were to come in and take their shots. That’s bullish.

If you’re wondering if it’s time to get into stocks or time to go to the sidelines, you’re not alone.

While millions of new-to-the-market retail traders and investors bought the March dip, millions more went to the sidelines, parking $4.8 trillion in money market funds, more than during the financial crisis.

Now we know retail was right. And we know sidelined investors in money market funds started buying stocks in June, drawing down fund balances by $300 billion at the end of August, and sending markets to new highs.

Then September swept in and shook up everyone.

Now, just as stocks were trying to bounce off their September correction territory lows, in spite of what everyone expects will be a contested election, the President of the United States and his wife get hit by the coronavirus, and stocks are falling again.

So, investors are asking themselves, as they often do, “what now?”

The answer’s simple: start buying.

Here are 10 reasons you should be buying stocks now… and two strategies for buying them.

Market analysts almost always use history as a guide when calculating likely stock market moves, especially when it comes to elections. This year’s no exception.

But, of all the historical references and metrics being incorporated this time around, there’s really only one that matters.

This election is going to be “contested” and only one other presidential election in modern era has been contested, and we know what the market did then.

Here’s why Tuesday’s debate almost guarantees a contested election, what the market did the last time the country waited to find out who their next president was going to be, and how you can profit handsomely by putting on an inexpensive option position to ride out the storm.

This week’s going to be a battle between buy-the-dip retail traders and double-dip recession fearing investors. Each side has plenty of ammunition and both camps are looking for back-up in data out this week and possibly some direction from the debate on Tuesday.

Bulls are betting the dip in markets and correction in some mega-cap tech darlings are a buying opportunity. And they’re going to test the waters early this week. Bears are betting the dip’s not done and sloppy data on the heels of no-stimulus in sight will grease the path lower.

Last week’s fight gave both camps hope, but the round went to the bears.

My money’s with them because retail buy-the-dippers aren’t likely to get institutional follow-on momentum as money managers aren’t ready to commit the massive amount of sidelined cash they have at the ready until they see what the election brings.

Here’s what happened last week, what data points could move markets this week, and a final word on the near-term direction of equities.

What looked at the end of the week like a dull week, last week, was anything but.

I’m not a “gold bug,” never have been, never will be.

A “gold bug” is someone who expounds the many virtues of owning gold, including that it’s a “store of value,” a “safe-haven” investment, an inflation hedge, and because its been hoarded by investors, central banks and governments the world over, it’s price is always going to rise.

All of that’s true, to some degree, but only because so many people believe gold is all that and more.

The reason I don’t trade gold all the time is it’s not volatile enough, meaning it doesn’t move up and down enough for me to watch it and trade its ups and downs. The reason I don’t invest in gold for long periods is because I don’t think it’s going anywhere, and I’d rather place my capital in stocks or other instruments I think are moving a lot higher.

But, that doesn’t mean I don’t buy, sell, trade, and invest in gold, especially when I see a good set-up, meaning a set of reasons gold’s about to make a move, I’ll jump in.

This is one of those times.

The Federal Reserve’s not the problem, or maybe it is.

Economic growth, job creation, narrowing the wealth gap, equal opportunity in America, are the problems, but not the Fed’s problems.

Those problems should fall on the administration in power and Congress, but instead, the Fed has made these problems their concern, and if that doesn’t change, our economy could be headed for trouble, big trouble. We’re talking a meltdown that will put the Great Recession to shame.

On October 10, 2020, the Saturday before Columbus Day, the Fed should announce a new role for itself, one that will shake up markets, politics, and the country, but ultimately result in the problems the Fed can’t fix being addressed and fixed by presidents and Congress.

It’s been done before. On the Saturday prior to Columbus Day in 1979, then Fed chairman Paul Volcker, the last strong, independent Federal Reserve chairman, changed America’s future.

Jerome Powell, you’re up.