Hey everyone, welcome to the K.E.Report, another daily editorial as we are chatting with T.G.Watkins.We're going to be talking election market runs, a lot of different sectors really benefiting from those U.S.election results.
as well as get TG's thoughts on precious metals and any other commodities, whether he sees bullish or bearish outlooks.TG is the director of stocks at Simpler Trading, also editor of the Profit Pilot website, which we will link to in the show notes.
TG, what caught your eye when it comes to the market runs that we saw in the back of the election?Because quite frankly, boy, oh boy, seems like a lot of green on the screen.
Seems like a lot of investors going full on, risk on after the Republicans pretty much sweep of that election.
Yeah, that's absolutely true.And I will say I'm getting 2020 vibes again, and I've been telling everybody who will listen what's going on and what I think is happening here.
It originally started with interest rates being cut and all that kind of stuff.It's a more favorable environment for small caps.And, you know, the story that I've been trying to tell and explain to people is that, you know, if this is another 2020,
You have to remember, you know, for as much as people are thinking about politics with this, remember that in 2020, the market absolutely went on a tear and started its really crazy 2020 run the day after the election when Joe Biden got elected.
So, you know, the market's just happy that somebody got picked and now the market's like, okay, what is this administration about and where can we go?
And in 2020, it was all about certain things and interest rates were getting cut and the Fed was shooting a bazooka of money at the market.And so those things went crazy.
Well, this time, okay, so we don't necessarily have a bazooka of money getting shot at the market, but we do have Trump and Elon and some other people who are pro-business and pro-growth and pro-expansion.
So that's what the market is running on is on that narrative.Plus, we have already been and started an interest rate cutting cycle.And so if you look at the small caps, they have been hibernating ever since the bubble got popped in 2021.
And if you look at the IWM, the IWM is now higher than it was at its top in 2020, 2021.And so this is a clear sign that things are happening and that the market is viewing this as a very favorable risk on situation and condition and
So regardless of politics, we're here to make money and trade in the market.You need to understand where these forces are and just go with them and ride the wave that's happening here.
Yeah, solid points, TG.And if you think back to 2020 when Biden won that election, we saw things like solar stocks take off and cannabis stocks take off.This time, we've actually seen those reverse down hard out on this election win.
But in contrast, we've seen things like the small caps and tech continue to blasting higher.
But you made a great point off mic to us that also space itself because Elon Musk is going to be integral with Trump's administration, and you know, being a SpaceX guy and just being a proponent
You've noticed that a couple of different companies that have exposure to space exploration or that kind of the side of tech, you know, are getting a boon.Maybe walk us through what you're seeing there.
Yeah.And again, we always like to preface everything about, you know, whether it be politics or not, but this is just what's happening.This is our reality.So let's take advantage of it.
And with that, you know, we have to remember that Trump, when he was in presidency before, he helped create Space Force. And now Elon is shoulder to shoulder with him and part of the administration.
So I think space exploration is really going to ramp up.I think that a lot of the technology is ready to go.
And when, now that we have SpaceX that can prove that they have the cheapest way to get into space, I mean, they are leaps and bounds ahead of any other rocket provider to get into space for cheap cost.
I mean, you look at how many launches and how much tons that they've gotten into space, they outstrip anybody.And now that they actually have, The Starship pretty much working and ready to go.I mean, they just caught the booster.
That's pretty awesome.So I think that there's a lot aligning here, and now they have a favorable administration that is going to be pro-space.
And then also with the competition with China and some of these other things, and we have Space Force, I just think that space-related things are going to have a boon.I think it's just the right time, the right era.
And if you look at one of the main tickers, DXYZ, it's actually more of an ETF, about 100 different tech stocks.SpaceX is something like 36 or 37% of it, and it is going crazy.So we've been watching it.I didn't quite catch on.
I don't know what I was thinking, but now I need to find an opportunity to get in on it.And I think something like that is going to be a great name going into the future.
But there are numerous other space-related stocks that you guys should be aware of, Rocket Lab being one of them. RDW being another and ASTS and basically you just need to kind of go around and find the research and see what works for you.
So is this pretty much just the next sector then, maybe shifting away from that AI trade that made so many people a lot of money in the last couple of years?
I think that's one of them, but I do think AI is still becoming a thing and still is a thing.I don't know all the stocks, but like IonQ I think is related to it and it's shot up huge.If you look at some ETFs, I know CHAT, chat is another one for AI.
So I don't think that space is going to outstrip the AI phenomenon. I think it's just going to add to it.There's plenty to go around, and more than one sector can go up.And again, look at 2020.
There were easily five different sectors I can think of off the top of my head that were just ripping for the four months that this worked for.So we can eat, chew gum, and walk at the same time.It doesn't have to just be one sector.
Well, let's do that and look at some other small caps that are within the relative strength parameters.What other tickers in the small caps really have your eye right now, TG?
Well, I just mentioned a couple for space areas, but for small caps, I've been in Reddit, and it's now over 130% from my original entry. Cart, Instacart is also up.It has earnings I think tomorrow, so hopefully that goes well.
We're up something like 35% on that one.Toast, if you guys ever go out to eat and go to a restaurant and they bring you the little tablet that you put your credit card through, that's probably going to be a toast item.
So, you know, think about if the economy is going to pick up and interest rates are going to go down and people have more money to spend, they're probably going to go out to restaurants.So, more transactions through toast.
On the transaction thing, look at Square.SoFi, that's another one that has been going up.But also financials are doing well.So we have regional banks.I'm in KRE.I'm using the leveraged ETF of KRE, which is DPST, and that thing's up 50 or 60%.
We're in NTNX, and that's more tech-related.Shake Shack, think again, restaurants, you know, doing well.Shake Shack is awesome.HNST, this is honest brands.
I think just more consumer stuff is probably going to go up if people are going to be buying more.We're also in anything related to Bitcoin, but that's probably another topic we can get into in a few minutes.HIMS, H-I-M-S.
I don't know why that one's doing so well, but it's doing phenomenally well.We bought it last week and it's up 25% today alone and breaking out.
AFRM, so you go back to the whole financial thing, more transactions, interest rates coming out, people are going to start spending more.AFRM is a buy now pay later.It just broke out.It had earnings and it's breaking out today.
We bought it last week.Net is another technology something, you know, related to Cloudflare.And so it's going to be doing well.We just bought it last week.SoundHound, S-O-U-N,
NVIDIA actually owns a percentage of them or is invested with them and it's AI so it looks like it's breaking out and starting to do well.
There's a lot of stuff and we can talk more about that if you want but I'll just also say I think where all that is all technology and stuff there are areas that are not doing so well and I think semiconductors are kind of struggling right now and I don't know what exactly the reason is but my guess is it might have something to do with tariffs in China and just something to do with semiconductors.
That is fair.There is the potential here of some tariffs that could impact some industries.But you're right, TG.There is a lot of major runs going on within the markets.Let's touch on cryptocurrencies.Bitcoin at $85,000.
Now those calls for $100,000 Bitcoin are really just right around the corner. could be.
Look, we all know how positive Trump has been towards Bitcoin, but is this another area where the breakout just in the last couple of trading days could be, again, just another move higher for that sector?
Absolutely.If you look at Bitcoin itself, it topped out, oh, let's say October of 2021. And it had a long pullback again, the bubble needed to get popped.And these things weren't dead, but they need to get repriced.
And they needed to wait for a more favorable environment.And then it kind of bottomed out and then started to catch some support around September, maybe August, September of 2023.And that's, you know, we that brought it up to new highs.
But then since about March, it has been pulling back.So there has been a very long term pullback.And again, this is setting up a perfect pattern.
This whole thing that I just explained, if you look on a monthly timeframe, and you step back, it's a giant cup with declining handle.And those are one of the strongest patterns out there.And now that we're breaking out, this thing is fully
on its way up to wherever it's going to go.I don't have any targets.I don't know where it's going to go.I don't know how long it's going to take.But if I just say, how did this thing start?
We can point towards this excellent, excellent technical pattern that has formed beautifully and is now breaking out.And we actually bought the leveraged ETF of Bitcoin.
It's called Bit X and we bought it October 14th and we are up current keeps going up.We're up 60% already.So I've been telling everyone in the Moxie trading room, which is my trading room,
to be involved one way or another with Bitcoin or the Bitcoin miners.And those Bitcoin miners are also finally starting to take off and work again.
They have gone through, oh, you know, whatever you want to call it, but a pretty cold winter since Bitcoin topped out and they are finally starting to wake up again.
Yeah, TG, I was gonna ask you about just that.The Bitcoin miners, I've been looking at things like Hut8, Riot, Mara, Galaxy.They're all ramping higher.I mean, launching higher.Some of them have gaps higher.
Are you concerned that some of those gaps could get filled?Is this just kind of the very volatile nature of the crypto miners in general?How are you looking at them?
I'm not worried about the gaps.And yes, this is the volatile nature of the crypto market.Absolutely.I mean, really, you just look at Mara in Hut 8, they've had their moments.
And then, you know, really something about over summer, they looked like they were going to go and then they just all crapped out.
And they were just, again, kind of hibernating at some really low levels until this all finally started to get back together.It's been a long time.It's been a long time for them.
And I think with, of course, Bitcoin making new highs and on its way to whatever number it's going to go, of course, the Bitcoin miners are going to be doing well.
And so we are in a ticker called Irene, I-R-E-N, but there's also W-U-L-F, Wolf, that's doing well.Yeah, not all of them are created equally.There are some that are doing better than others.
And so I tried to pick the ones that I thought were in kind of the best situations.
All right, TG, let's look to an area that we like to talk to you about that isn't seeming to benefit from that Trump victory.That's precious metals.Gold is almost $200 off some of its recent highs.
Today, we're seeing high volume and pretty significant sell-offs in the mining ETS, like GDX, GDXJ, SIL.Those are down at least 6%, if not more,
What's your outlook for precious metals and that bit of turn of direction we've seen on the back of that election?
I'll basically point towards two things.One, from a technical standpoint, gold really had a massive, massive run.Okay, I mean, gold, when it runs, it can run pretty big.It has been flat for years and then finally broke out and ran.
But man, this thing just went through the roof and up towards the moon.And at some point, it was just going to be overbought.If you look at the gold futures, you know, on the weekly chart, it definitely hit the weekly third ATR.
If you look at GLD, I've been telling traders like,
hey, this thing is really far up there, I don't know how far it's going to go, but make sure you keep a tight leash on it, because at some point this thing is just not going to keep going up, that's just how these things work, they don't go up forever like this.
And so from a technical standpoint, that's what I can say.From something else that might be happening, then I look at the dollar, and the dollar turntail has started going up, and I think that might be
part of the situation as to why gold finally started to break is because the dollar is going up.
And for whatever reason, maybe this has something to do with the election and, you know, where interests are and people are like, oh, well, the market's going to be going up and doing great.
We really don't need gold as a hedge anymore against all this stuff.And with the rising dollar, we just don't need this anymore.
We'd rather put our money into things like tech that's going to be going through the roof over the next, you know, foreseeable future.
Yeah, solid point with the strength of the greenback hurting not just gold and silver, but really the commodities complex across the board.We saw a lot of selling in the commodities all week last week after the election results.
I'd love to dive in a little bit further, though, to the gold equities, TG, and the chart of GDX, since that's one that a lot of people listening follow in their own accounts, or at least use it as a proxy for the health of the gold miners.
It was having kind of that stair-step higher of higher lows and higher highs.Now that's breaking down.Where do you find support? Is this something that you would just kind of stay out of and avoid?
And at what point would you be willing to take a stab at it again?
Well, if you do look at GDX itself, it pretty much worked its way back up to its previous all-time high that appears to be back around August of 2020.And so from a technical standpoint, you could say, well, it just hit a double top.It hit resistance.
Beyond that, if you look at the daily chart and you're talking about this higher high and higher lows, there is a pretty nice clean channel that GDX has been going up since May.
And it now has definitively broken below that channel and definitively broken the daily 50.And so this particular trend is off and no longer a thing until it sets up again.
I'm just guessing here, but maybe I would look at the monthly 10 SMA, and maybe the weekly 50 SMA.Those are kind of general things that I'd look for.But basically, the only thing I can say is the uptrend is over for now.
And if it's going to come back, I think it's going to need some time.And we don't know if it's going to, but then just keep watching and waiting.But I personally, I'm short enough term that I wouldn't be holding on to these things.
I think that there are other opportunities that are better right now.And there's no need to just wish and hope and pray for this thing to turn around, which it may or may not.
Yeah, fair enough.Well, I guess we'll see.It's been a very quick drop, almost, I guess, three weeks now going on to four weeks where that market has drastically turned and no longer higher lows, at least.So we'll see where it bottoms from there.
But look, in all fairness, TG, it's also a fair bit away from the actual all time highs back in 2011, too.But those are just in a whole different trading level.
Let's also talk uranium, because it was one aspect we were asking you about commodity-wise.What do you think could benefit from these election results?You said uranium.Break down why, please.
Yeah, so uranium is a commodity, and so you could make the argument that maybe the strong dollar could affect it.But I think there's a stronger force that's going on with uranium, and that's basically we need nuclear power.
And we're going to be powering not only Bitcoin, especially since that's resurging and becoming a thing, so that's going to be on people's radar more, but also AI and just kind of our technology in general.
We are going to be coming more and more technologically advanced.We have massive data centers.People keep using more and more electricity. And if we are going to try to go green, the only way we can do that for now is to go nuclear.
It's the only stopgap measure that we have between fossil fuels and a world of complete renewables.And I think we have come a very, very long way, far away, successfully about technology and nuclear. And I think it's ready to go.
I think we're ready to kind of work on these new generation, small modular reactors.And so I think that nuclear is going to do well.
You know, we have a couple of tickers for that, but then also uranium, I think is going to keep going up just because you're going to have to fuel and power these things.And I think that is how they will separate themselves from just commodities.
Well, I'd love to hear some of the tickers for the small modular reactors.But before we do that, could you give us your read on the ETF URNM?
URNM is probably the best proxy for the uranium sector because it also has the Sprott physical uranium inside of it.So it's got uranium stocks and physical uranium all in one ETF.How are you looking at URNM?
You know, and that might be the case if it's the best proxy, but it's not actually the best stock for the uranium that I like.I actually like UEC and I like CCJ, and those are going to be more like uranium miners.
I think they have the best looking technicals and patterns and stuff like that.But if you look at UR, interestingly, this is actually what I was telling you guys last time we were on, URNM around October had cleared over its daily 50.
It was coming up onto its daily 200.And that's a typical pattern that I look for.And I say, hey, I want to see price come back down to the daily 50.Well, it took a little extra move that I didn't quite see.
But I think it was because all this news came out about Microsoft and Three Mile Island and Amazon and Google and all these big cap tech names getting into uranium and nuclear, that there was this last little surge.And you can see that surge
basically the end of October and prices then since come down.
So even though it took a little extra detour than I would have expected, the pattern that I talk to all my traders about, that I teach about, it's called a 50-200-50 maneuver, as I have been looking for price to come back down to the daily 50 ever since that last time you and I spoke when URNM was up here early October.
And so Usually, the kind of pattern I talk about here is I want to see if the daily 50 or around that area will hold for strength and then start to move up.
If that happens, and if I can confirm that this thing's actually done pulling back, then the daily 50 should be the confirmation of the next area for price to move up.So I like what I'm seeing here.I like the sector.
I would really be looking at this and seeing if this area can find support and if we're going to start moving up over the next days to weeks.
All right. T.G., we'll wrap it up here.T.G.Watkins, director of stocks at Simpler Trading, also editor of the Profit Pilot website.Click that link in the show notes.T.G., it sounds like there's a lot of opportunities out there in these markets.
So investors do need to take note of just how strong some of these moves are and I think play some of those uptrends because, well, they're here.Who knows how long they're going to be around?
Yeah, absolutely.Well, I will say on that, you know, in 2020, that the crazy uptrend for the small caps lasted for four months.It started with the election, and then it basically went till mid-February.
And I think the reason is because inflation and interest rates going up and, you know, the Fed realized that, oh, crap, we're in trouble.We need to fix this.This time around, I don't think we have those things.I think this is a more legitimate setup.
Those small caps, the bubble already popped back then.They have been hibernating for a year or two or more. And we are now in a reasonable rate cutting cycle as opposed to an emergency rate cut cycle, you know, going to zero because of COVID.
And the government is not throwing a bazooka of money.And we're here because people are kind of foreseeing a future of economic prosperity and stuff like that.So I think, I sure hope, but I think that this is going to last more than four months.
And I think we've got room to go because I don't think that this is going to be as much of a bubble.I think this should hopefully be a more sustained thing, even though it's looking pretty FOMO-y right now.
All right, TG, thank you again for your time, man.
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