November 2024

November 6, 2024

(WALL STREETS GIVES THE LOWDOWN ON STOCKS/SECTORS UNDER A HARRIS OR TRUMP WIN)

November 6, 2024

Hello everyone.

It’s November 5 - election day. Early numbers point to a Republican win. But it is the swing states that will decide who is the next President of the U.S.

So, we wait.

But, whoever wins, we need to know what stocks/sectors will benefit under each party and why.

It’s 9:45 p.m. Pacific time and the race for the Presidency is very close. The outcome will be consequential for markets on many fronts, including dictating policies that could damage or assist different industries, as well as tax and spending plans that will influence the direction of interest rates and the U.S. dollar.

A Trump win is seen as positive for financials, given a higher likelihood of deregulation for companies in the space. UBS argued that investment banks would outperform from more mergers and acquisitions across the sector. UBS’s top picks for a Trump presidency win include Goldman Sachs, Citigroup, and Citizens Financial.

Goldman Sachs analysts see a GOP sweep resulting in the S&P500 rallying 3%. By way of contrast, the bank sees a Democratic sweep sparking a 3% sell-off for the benchmark. Smaller stocks, the bank believes, are also seen as beneficiaries of a Trump win.

One of the sectors that could see major disruption after the election is energy.

If Harris wins, she is expected to preserve the Inflation Reduction Act, which has boosted a transition into renewable energy. But the IRA passed without GOP support, so if Trump wins, he could repeal it. Stocks to keep an eye on here include: SolarEdge Technologies, Enphase Energy, First Solar, and Invesco Solar ETF (TAN).

Traditional oil and gas names are also likely to benefit under a second Trump presidency.

Investors should keep an eye on giants like Exxon Mobil and Chevron.

And a Trump presidency would be uber bullish for Tesla, which could see the stock jump very quickly towards $300.

But what about retail stocks?

Trump has talked a lot about tariffs. He is proposing 10%-20% tariffs on most imports, and some levies may be as high as 60%+ for China. Target may have a tough time under a harsher tariff regime.

Harris’s policy may mirror the Biden administration.

And small caps. How would they fare?

Under a Trump presidency, they may be a major winner, given the former president’s willingness to roll back regulation and cut tax rates further for companies.

As of Tuesday afternoon, the iShares Russell 2000 ETF (IWM) was up more than 10% for the year.

So, now to crypto. Trump has signaled his support for the industry in his campaign. A Trump presidency would probably see digital currencies such as bitcoin scale to new heights due to a more favourable regulatory regime.

A Harris administration, however, is not seen as favourable for crypto.

Stocks to watch here include Coinbase and the iShares Bitcoin Trust ETF (IBIT), which has rallied 30% over the past three months. And don’t forget Bitcoin and ether, which you can purchase through a crypto exchange.

The U.S. dollar started to rally early in the evening yesterday as early voting started to lean toward the Republicans. Protectionist policies such as tariffs under the Trump administration would boost the dollar. But, some investment banks, such as UBS, think this move is only temporary and believe that investors should use these periods of strength to diversify dollar exposure toward other G10 currencies.

They argue that the dollar is overvalued and has a smaller yield advantage over other currencies, and the US’s significant twin fiscal and current account deficits are likely to weigh on the currency regardless of who takes the Presidency.

It's now just after midnight, and DOW Futures are up over 800 points. Looks like there will be a strong rally in the markets on Wednesday, as Trump is expected to take the Presidency.

Thank you to all those who attended my monthly Zoom meeting yesterday. We had a great discussion after the presentation. Thank you, too, to those who gave me suggestions for future newsletter topics. The recording will be sent out to everyone after it has been edited.

Gold and Silver have retraced after a strong move to the upside, so if you want to scale in or add weight to your precious metal holdings, now is a good time to do so. You could also use LEAPS as an alternative to scaling into stocks, or you could do both.

(GLD), (GOLD), (GDX), (WPM), (SLV), (AGQ)

I would also be looking at scaling into Exxon Mobil (XOM) and Tesla (TSLA). You could also add LEAPS one year out as an alternative or do both.

Cheers

Jacquie

Trade Alert - (META) November 6, 2024 - BUY

Tech Alert

When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline. Read more

November 6, 2024

Diary, Newsletter, Summary

Global Market Comments
November 6, 2024
Fiat Lux

Featured Trade:

(WHY TECHNICAL ANALYSIS DOESN’T WORK)
(SPY), (QQQ), (IWM), (VIX),
(TESTIMONIAL)

Why Technical Analysis is a Disaster

Diary, Newsletter

I recently heard an amazing piece of information from a subscriber.

Fidelity recently conducted a study to identify their best-performing clients.

They neatly fell into two groups: people who forgot they had an account at Fidelity and dead people.

It all underlines the futility of trading the markets without true professional guidance such as you get here at Mad Hedge Fund Trader, something many aspire to, but few actually accomplish.

Of the many thousands of online newsletters and trade mentoring services, I only know of three that actually make money for clients.

Those would be mine and two others, and I’m not taking about who the other two are.

It is an industry filled with professional marketers, charlatans, and conmen. I recently figured out that industries that employ a lot of specific jargon attract conmen because it is so easy to convince people of your expertise. Those are the health supplement and financial industries.

Let me point out a few harsh lessons learned from this most recent meltdown.

We are now transitioning from a “Sell in May” to a “Buy in November” posture.

The next six months are ones of historical seasonal market strength (click here for the misty origins of this trend at “If You Sell in May, What To Do in April?”).

The big lesson learned this summer was the utter uselessness of technical analyses. Usually, these guys are right only 50% of the time. This year, they missed the boat entirely.

When the S&P 500 (SPY) was meandering in a narrow nine-point range, and the Volatility Index (VIX) hugged the $12 neighborhood, they said this would continue for the rest of the year.

It didn’t.

This is why technical analysis is utterly useless as an investment strategy. How many hedge funds use a pure technical strategy on a stand-alone basis?

Absolutely none, as it doesn’t make any money.

At best, it is just one of 100 tools you need to trade the market effectively. The shorter the time frame, the more accurate it becomes.

On an intraday basis, technical analysis is actually quite useful. But I doubt few of you engage in this hopeless persuasion. Most senior investors would rather spend their time on a golf course than be glued to a screen.

Leave it for the kids.

This is why I advise portfolio managers and financial advisors to use technical analysis as a means of timing order executions, and nothing more.

Most professionals agree with me. That’s why so much volume bunches up at the opening and the close every day, to get a nice average.

Technical analysis derives from humans’ preference for looking at pictures instead of engaging in abstract mental processes. A picture is worth 1,000 words, and probably a lot more.

This is why technical analysis appeals to so many young people entering the market for the first time.

Buy a book for $5 on Amazon, and you can become a Master of the Universe.

Who can resist that?

The problem is that high frequency traders also bought that same book from Amazon a long time ago and have designed algorithms to frustrate every move of the technical analyst.

Sorry to be the buzz kill, but that is my take on technical analysis.

I have a much better solution than forgetting you have a trading account or dying.

Take Cunard’s round-the-world cruise (click here for the link).

I have been sailing with Cunard since the 1970’s when the original Queen Elizabeth was still afloat.

I’ve lost count of how many Transatlantic voyages I have taken across the pond.

For a mere $19,999 you can spend 122 days circumnavigating the globe with Cunard from Southampton, England in their cheapest inside cabin.

That includes all the food you can eat for four months.

On the way you can visit such exotic destinations as Bora Bora, The Seychelles, Reunion, and Moorea.

Not a bad deal.

By the time you get home, you will probably earn enough in your investment account to pay for the entire trip.

Hope you enjoyed your cruise.

Correction? What Correction?

November 5, 2024

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
November 5, 2024
Fiat Lux

Featured Trade:

(DANCING WITH SHADOWS)

(RHHBY), (SGMO), (LLY), (BIIB), (ABBV)

Dancing With Shadows

Biotech Letter

In 1906, Dr. Alois Alzheimer first encountered what he called a “mysterious” mental illness, examining the brain of a 55-year-old woman who had died under strange neurological circumstances.

Over a century later, that mystery hasn’t let up. We’re still scratching our heads—and burning through money.

By 2050, Alzheimer’s is projected to cost the U.S. healthcare system $1.3 trillion, more than the entire GDP of Australia.

But something’s happening at Roche (RHHBY) that’s got my scientific spidey senses tingling.

Roche has been chasing Alzheimer’s solutions for over two decades, pouring resources into this elusive brain burglar that defies every rule in the book.

And yet, here they are—undaunted, driven by a noble (and, yes, profitable) goal to relieve the massive toll AD takes on patients, families, and entire healthcare systems.

It hasn’t been smooth sailing; setbacks and “whoops, not this time” moments have kept things bumpy. Recently, though, I’ve been seeing hints of a breakthrough that just might bring this long, shadowy dance with Alzheimer’s closer to the light.

For those who've been reading my letter since 2008, you know I rarely get excited about big pharma unless there's real meat on the bone. Well, this time there is, and it's called Brainshuttle technology.

If you’ve never heard of it, think of it as a kind of souped-up delivery service for the brain—no, not that kind. This tech helps Roche’s meds cross the blood-brain barrier, that stubborn security guard that only lets a select few molecules into the brain.

It’s great at keeping out random junk but also frustratingly good at blocking drugs we actually want to get in there.

Brainshuttle could change that, allowing antibodies to cross over more easily and making lower doses (and hopefully fewer nasty side effects) possible.

Enter trontinemab, a drug that’s caught a lot of eyes recently. Armed with Brainshuttle, this amyloid-beta antibody is like the brain’s personal pest control.

Early trials are promising: Roche reported that trontinemab is sweeping out amyloid plaque faster than a Roomba on espresso, and all at lower doses.

Less dose, more punch, and fewer side effects? Sounds like the AD holy grail. They’re even eyeing an accelerated approval path with the FDA.

Now, the FDA isn’t exactly known for sprinting to approval—especially with Alzheimer’s drugs—but trontinemab’s early results make it a strong contender.

But Roche isn’t putting all its eggs in one beta basket. AD research has been dominated by amyloid-beta, but there’s another protein that scientists are pretty excited about: tau.

If amyloid-beta is the ringleader, tau is the muscle, the heavy that clogs up brain cells and wreaks havoc.

To tackle tau, Roche has teamed up with Sangamo Therapeutics (SGMO), a company with tech that sounds like it’s straight out of a sci-fi novel—zinc finger molecules.

These little DNA-grabbers are designed to silence the tau gene, essentially telling it to cool it and stop producing the stuff that clogs up the brain.

The partnership also gives Roche access to something else in Sangamo’s arsenal: an adeno-associated virus capsid. (Translation: a delivery mechanism that gets things across the blood-brain barrier.)

If these tools work as planned, Roche may have a real chance to give AD a one-two punch with both amyloid-beta and tau treatments.

But let's be real here. This is still the Wild West of biotech, and Roche has had its share of setbacks.

They recently walked away from a partnership with UCB, returning the rights to an anti-tau antibody called bepranemab.

Even though UCB called the Phase 2a data "encouraging," it apparently didn't meet Roche's internal bar. That's the thing about Alzheimer's drug development - it's about as predictable as my teenager's mood swings.

The competition isn't sleeping either. Eli Lilly (LLY), Biogen (BIIB), and AbbVie (ABBV) are all throwing everything but the kitchen sink at this disease. But Roche's Brainshuttle technology might just be their secret weapon in this fight.

Here's what keeps me optimistic: Roche’s multi-pronged strategy, combining amyloid-beta and tau, might just give them an edge. It’s not guaranteed—far from it—but having multiple avenues does give them a better shot at success.

This is what I call a "chess not checkers" opportunity. The potential payoff is massive - we're talking about a market that could make crypto's best days look like pocket change. But timing is everything.

So, I'll be watching trontinemab's development like a hawk. The Sangamo collaboration is also on my radar - any breakthrough in tau-targeted therapies could be a game-changer.

As always, don’t bet the farm, folks—not even on a biotech darling like this. But if you’re itching to add a little intellectual flair to your portfolio, Roche’s Alzheimer’s gambit is worth a look. Buy the dip, but set those stop losses. After all, even the best-laid plans of mice and biochemists often go awry.

Trade Alert - (GLD) November 5, 2024 - BUY

Trade Alert

When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline. Read more

November 5, 2024

Diary, Newsletter, Summary

Global Market Comments
November 5, 2024
Fiat Lux

Featured Trade:

(THE IRS LETTER YOU SHOULD DREAD),
(TESTIMONIAL)

The AI-Powered Battle Against Deepfakes: Detection and Prevention

Mad Hedge AI

Deepfakes, synthetic media where a person in an existing image or video is replaced with someone else's likeness, have evolved from a technological curiosity to a serious threat. Their potential for misuse in spreading misinformation, manipulating public opinion, and enabling fraud is alarming. Thankfully, the same technology powering the creation of deepfakes – Artificial intelligence (AI) – is also being harnessed to detect and prevent their spread. This article delves into the ongoing arms race between deepfake creators and those combating them, highlighting the AI-driven techniques at the forefront of this struggle.

Understanding the Deepfake Threat

Before we dive into the solutions, it's crucial to understand the magnitude of the problem. Deepfakes are becoming increasingly sophisticated, making them harder to discern from real media. This has far-reaching implications:

Political Manipulation: Deepfakes can be used to create false narratives, damage reputations, or sway public opinion during elections. Imagine a fabricated video of a political leader making inflammatory remarks going viral – the consequences could be disastrous.
Fraud and Extortion: Deepfakes can be used to impersonate individuals, enabling scams, identity theft, and even extortion.
Erosion of Trust: As deepfakes become more prevalent, they erode public trust in media and institutions, making it difficult to distinguish truth from falsehood.

AI-Powered Deepfake Detection

Researchers and tech companies are actively developing AI algorithms to detect deepfakes. Here are some of the key approaches:

Artifact-Based Detection:

Inconsistencies in Facial Expressions and Movements: Deepfakes often struggle to perfectly replicate natural facial movements, especially around the eyes, mouth, and eyebrows. AI algorithms can be trained to identify these subtle inconsistencies, such as unnatural blinking patterns, lack of facial muscle coordination, or inconsistencies in how the face reflects light.
Analyzing Pixels and Image Compression: Deepfakes are generated through complex manipulation of images and videos. This process can leave behind subtle digital artifacts, like unusual pixel patterns or inconsistencies in compression levels. AI algorithms can be trained to detect these anomalies.
Detecting Physiological Signals: Researchers are exploring ways to detect deepfakes by analyzing subtle physiological signals that are difficult to fake, such as blood flow patterns in the face. AI algorithms can analyze video footage to detect these signals and identify inconsistencies that may indicate a deepfake.

Deep Learning-Based Detection:

Convolutional Neural Networks (CNNs): CNNs are a type of AI model particularly well-suited for image and video analysis. They can be trained on massive datasets of real and fake videos to learn the subtle differences that distinguish them.
Recurrent Neural Networks (RNNs): RNNs excel at analyzing sequential data, making them effective at detecting temporal inconsistencies in deepfakes. They can analyze patterns in speech, lip movements, and facial expressions over time to identify anomalies.
Generative Adversarial Networks (GANs): Interestingly, GANs, the technology often used to create deepfakes, can also be used to detect them. In a technique known as "GAN fingerprinting," researchers can analyze the unique characteristics of the GAN model used to create a deepfake and use this information to identify other deepfakes generated by the same model.

Blockchain Technology:

Content Authentication and Provenance Tracking: Blockchain can be used to create an immutable record of the origin and history of media files. This can help verify the authenticity of content and track any manipulations it has undergone.
Decentralized Verification: Blockchain can enable a decentralized network of verifiers to analyze and validate the authenticity of media, making it more difficult for deepfakes to spread undetected.

AI-Driven Deepfake Prevention

Beyond detection, AI is also being used to proactively prevent the creation and spread of deepfakes:

Content Authentication and Watermarking: AI can be used to embed invisible watermarks or digital signatures into media files, making it possible to verify their authenticity and track their origin.
Platform-Level Prevention: Social media platforms and content-sharing websites are increasingly using AI-powered tools to identify and remove deepfakes before they can go viral.
Media Literacy and Awareness: AI can be used to develop educational tools and resources that raise awareness about deepfakes and teach people how to identify them.

Challenges and Future Directions

Despite the progress made in deepfake detection and prevention, several challenges remain:

The Evolving Nature of Deepfakes: Deepfake technology is constantly improving, making it a moving target for detection algorithms. Researchers need to continuously update and refine their methods to keep pace with these advancements.
Limited Datasets: Training effective AI models requires large and diverse datasets of both real and fake videos. The availability of such datasets is often limited, hindering the development of robust detection methods.
Ethical Considerations: The use of AI to detect and prevent deepfakes raises ethical concerns, particularly around privacy and freedom of expression. It's crucial to develop responsible AI technologies that respect these fundamental rights.

Looking ahead, the fight against deepfakes will likely involve a multi-faceted approach:

Collaboration and Data Sharing: Increased collaboration between researchers, tech companies, and policymakers is crucial to develop effective solutions. Sharing data and expertise will accelerate the development of more robust detection and prevention technologies.
Advanced AI Techniques: Exploring new AI techniques, such as federated learning and explainable AI, can help improve the accuracy and transparency of deepfake detection systems.
Public Awareness and Education: Educating the public about deepfakes and promoting media literacy is essential to combat their negative impact.

Conclusion

The battle against deepfakes is an ongoing arms race, with AI playing a pivotal role on both sides. While the threat posed by deepfakes is significant, the development of AI-powered detection and prevention techniques offers hope. By harnessing the power of AI and fostering collaboration between researchers, tech companies, and policymakers, we can mitigate the risks posed by deepfakes and protect the integrity of our information ecosystem.

November 4, 2024

Tech Letter

Mad Hedge Technology Letter
November 4, 2024
Fiat Lux

Featured Trade:

(A SIDEWAY CORRECTION BEFORE THE MOVE UP)
(AAPL), (BRK-B)