How To Trade The Post-Election Market Bounce

Market Outlook and Approach

• The presenter described the market as a three-month sideways range with no clear trend or reliable tailwind, making large positions lower-probability. He favored waiting on the sidelines rather than forcing trades.
• He was not ready to call a market top or turn bearish based on a single decline. His framework for identifying a more durable top was to wait for progressively deeper pullbacks, failed rebounds or lower highs, and ultimately a break of horizontal support after a major decline. A drop below the 100-day moving average alone was not enough.
• He said he would consider a bearish position only after clearer technical confirmation of sustained seller control. He cautioned that bull markets can recover from early declines, and that buying dips has often worked historically.
• He viewed year-end seasonality as a reason not to fight the market with aggressive shorts. His preferred approach was to wait for a sharp sell-off or capitulation and then look for a confirmed rebound.

Trading Framework and Position Management

• Wait for confirmation rather than buying a dip blindly. For a new or larger long position, the main stated trigger was a close above Friday’s high in both SMH and SPY. He also said SPY needed to close above its 100-day moving average; the transcript does not fully clarify whether this was an additional requirement.
• After a confirmed breakout, he wanted to see an immediate follow-through green candle, suggesting buyers were acting decisively. He planned to add incrementally if the move continued, including as SMH reclaimed its 50-day and then 100-day moving averages.
• He described building a general position in five parts, starting small to reduce emotional decision-making. He would add only when the setup confirmed and exit if price action invalidated the thesis. If the average entry price was below the market and the price returned to that average, he said he would close around breakeven.
• For a potential capitulation low on an M5 (five-minute) chart, he looks for:
  • A gap down and relentless selling with minimal overlap—an “air pocket” or liquidation.
  • A bullish hammer or absorption pattern near the low, preferably early in the session.
  • A forceful rebound with consecutive green candles that quickly reclaim lost ground and close the gap.
• He said he would not open bullish put spreads across earnings announcements and generally waited for earnings-related volatility to pass before selling them. He reported using out-of-the-money bullish put spreads during quieter periods, with about two trades per week and a high win rate over the year, while acknowledging losses in some semiconductor trades.
• Cash was treated as a valid position during uncertain, event-heavy conditions.

SMH and Trade Examples

• SMH (VanEck Semiconductor ETF) was his main focus. He had been looking for a semiconductor-sector sell-off and a capitulation pattern, but said the earlier price action did not meet his ideal setup.
• SMH fell to about $510 and then rebounded. The presenter wanted to see a higher low and strong continuation rather than assume the low was in.
• In a Friday futures trade, he closed the position for a loss of 2.5 points after the expected rapid move into the gap did not occur.
• He also described buying:
  • January SMH $500 calls for $55.
  • Expiring SMH $520 calls for $0.45 each. He sold some at $1 and the rest at $2, reporting an average exit around $1.50. He characterized these short-dated calls as “lottery” options.
• He planned to wait through the Tuesday midterm election before adding to SMH, citing binary-event risk and uncertainty about possible policy effects on AI and data-center investment.

Company and Sector Discussion

• Intel: Results were weaker than expected. The presenter cited weak PC sales and Intel’s longstanding lag in chip development.
• Google: The presenter characterized its results as poor and said investors were concerned that AI could take share from search-advertising revenue.
• Microsoft: He described profits as good.
• Amazon: He described results as decent, with revenue and profit slightly below forecasts.
• He argued that investors were reacting negatively to large AI capital-spending commitments, despite potential benefits for chip suppliers. He cited projected 2027 AI capex approaching $1 trillion across Google, Microsoft, Meta, and Amazon.
• He said Taiwan Semiconductor (TSMC) had a forward P/E of about 17–18 and a PEG ratio near 0.7, which he viewed as attractive. He also said semiconductor companies’ income statements, forecasts, annual performance, and cash flows looked strong.
• The presenter speculated that rapid selling could reflect hedge-fund or retail-investor liquidation. He noted that margin lending had risen about 40% over the prior year.
• He cited a BlackRock comment questioning whether Anthropic could obtain a high credit rating for debt it might issue, which he said added pressure to AI and semiconductor stocks.

Macro and Event Calendar

The presenter said the market was still in a busy news cycle, including midterm elections, major technology earnings, and economic releases:

• Midterm elections: Tuesday; treated as a binary event.
• ISM manufacturing: Monday.
• ADP employment report: Wednesday.
• ISM services: Wednesday. He emphasized its relevance because services account for about 80% of the economy, and said a reading around 54 would be solid.
• Jobs report: Friday; the consensus forecast cited was 63,000 jobs. He thought the result could be stronger, citing average initial jobless claims of about 195,000.
• Upcoming company reports named: Apple, Palantir, and AMD.

Other economic and market observations included:

• GDP: Q3 growth was reported at 3.4%, which he called strong.
• FOMC/Fed: He described the statement as relatively hawkish. Fed-funds futures put the probability of a December rate hike at about 85%, up 5 percentage points after the statement. He noted that rising rates would be more concerning if economic growth were slowing.
• For S&P 500 companies that had reported, he cited FactSet data showing earnings growth of more than 25% year over year.

Assets and Instruments Mentioned

• Tickers: SPY, SMH.
• Other named securities and assets: Taiwan Semiconductor (TSMC), Intel, AMD, Apple, Palantir, Google, Microsoft, Meta, Amazon, Tesla, the S&P 500, S&P futures, and Fed-funds futures.
• Instruments and strategies: SMH call options, futures, bullish put spreads, short positions, moving-average levels, and cash.
• The subtitles also mention a Binance hack but provide no related trading analysis.

Disclosures and Cautions

• The presenter said his scenarios were not certain and that he would trade price confirmation rather than assumptions or forecasts. He repeatedly cautioned against taking large positions before the election and other major events.
• No explicit “not financial advice” disclaimer appears in the subtitles. The presenter did promote OneOption’s live trading service and a 14-day free trial.

Presenter and sources mentioned: Pete (OneOption presenter); FactSet; BlackRock; FOMC/Federal Reserve; ADP; and the named companies’ earnings reports.