I had done an article on how I prepare to trade elections. This is a an article on how I review my research and performance. I like to break my post trade analysis to “where I was right” to “where I was wrong” and the “areas I can improve” in the future.
Where I was right
My technical analysis was perfect. As seen in the preparation article, I predicted the a break in the upside of 340 in the SPY calls for an entry long. It did the market spiked up and as of yesterday the market closed at 350. That was a pretty decent trade. Chart seen below. Technical analysis has always been my strong suit so this performance doesn’t come as a surprise to me.
Where I was wrong
My fundamentals was quite flawed. My expectation was a victory for Biden will put the stock market down due to his promise of increase in tax for corporations. Even though the election results is yet to be known, it seems to be swinging toward Biden now. I was wrong in the prediction that market will go down if there is a victory for Biden. This primarily because of the fact that the law is passed in Senate and how Republicans won the senate and because of that Democratic Biden will find it hard to pass this higher taxes in the Senate. This could probably be the reason the market trade upward from a fundamental standpoint. I didn’t do much research on this department. This is just my second exposure to trade the US markets and the weakness is seen. Fortunately, my technicals saved me. This shows how combining analysis in both technicals and fundamentals is very much necessary for any trader or investor.
Areas of improvement
Something I noted post election rally and also in the post coronavirus rally was the out performance in technology stocks. The Nasdaq which is a technology weighted index would have been a better trade as it rose much higher than the S&P. I guess the big 5 technology firms (Google, Facebook , Amazon,Microsoft and Apple) is what every investor seems to think is an amazing bet. They are so powerful and that its impossible to avoid their exposure in any shape or form. So the next time I will be trading in the Nasdaq index along with S&P index to get better returns and exposure.