💥 While Markets Freeze on Elections & Credit—We’re Already Positioned

Midterms, Sauna, and Self-Serving Bias

Tuesday night, we did sauna, TV, and snacks. The midterms were on.

The election map was up on the big screen, my wife had the popcorn, Maya was texting from her new apartment at U of I asking about an Illinois race, Becki was following Chicago results from the West Loop, and David was on the floor with our dog. Meanwhile, I was doing what every dad does, pretending to understand every Senate race while waiting for someone to explain it to me.

We rotate. Twenty minutes in the sauna, then back to the cold living room to see who flipped where. It's become our strange little election tradition. Sweat, snacks, and opinions.

My wife and I kept asking ourselves why we bother watching the results live. Everyone comes into an election with their own opinions and biases. My feed says one thing, her friends' feeds say the opposite, and somehow everybody is convinced they're getting the only honest version of events. But we keep watching because it matters, and because it's a fascinating lesson in how people think.

What made this night different was David. He's 11 now, and for the first time, he wasn't just asking who won. He wanted to know why people were so sure their side would win. Why commentators sounded so confident when their party was ahead, and why they suddenly had an explanation ready when the numbers went the other way.

That's when my wife said, "That's self-serving bias."

She was right. And it's something I see in trading all the time.

Self-serving bias is relatively simple. When something goes our way, it's because we're smart. When things go against us, it's because the market is rigged, the Federal Reserve said something unexpected, or the algorithms manipulated the opening bell. In politics, we see the same thing. Our side wins because its ideas are better. Our side loses because something must have gone wrong.

The problem is that our brains aren't particularly interested in admitting when we're wrong.

And this is especially dangerous when we allow political preferences, personal convictions, or yesterday's successful trade to influence tomorrow's investment decisions. If we believe a particular administration is good for business, we might remain bullish even when the technical evidence suggests otherwise. If we're convinced the other party will destroy the economy, we might miss an entire rally waiting for the market to agree.

At that point, we're no longer trading prices. We're trading our identities.

The market doesn't vote. It doesn't care who you voted for. It simply reflects the collective decisions of millions of participants, and those decisions can change very quickly.

We talked about this in the sauna, my wife, David, and I sitting in 180-degree heat, debating why admitting you're wrong can be so difficult. David said it's embarrassing to change your mind. I told him that some of the best traders I know change their minds all the time.

That's not weakness. That's discipline.

And after watching Wall Street's reaction to the midterms this week, I can't think of a better lesson to carry into the markets.

Recent Trade Review: Accenture (ACN)

Last week, our Dynamic Power Trader model identified an opportunity in Accenture (ACN), the global professional services and technology consulting company, as market conditions continued to shift.

Rather than simply chasing momentum in technology stocks, the model identified a market-neutral options opportunity supported by Accenture's relative strength, improving institutional flow signals, and a volatility environment favorable to our put-spread structure.

We entered the position, managed the trade, and closed it for a reported profit of more than 30% in just a matter of days.

What I particularly appreciate about this example isn't simply the return. It's the process behind the decision. We were looking for an opportunity where the probability, timing, and risk characteristics aligned with our strategy rather than trying to predict every move in the broader market.

In environments like this, execution becomes especially important. One of the major differences between our free educational resources and paid trading services is that subscribers receive timely SMS alerts when our strategies identify entries and exits. This helps traders respond to changing conditions without having to constantly monitor every market fluctuation.

You can review this trade and our recent market analysis in the Live Trading Room recordings.

As always, past trading results don't guarantee future performance, and options strategies involve risk. But this trade illustrates why I believe a repeatable, risk-conscious process becomes particularly valuable during volatile markets.

Current Trading Landscape

SPY experienced a substantial technical breakdown this week, falling below the 740–750 support area that I had previously identified as particularly important for the bulls. Thursday's decline took the ETF to approximately $733, putting renewed pressure on the market's technical structure and bringing longer-term support into focus. Although Friday's trading has produced a partial recovery, I believe the 740–750 region now represents the first important area that buyers need to reclaim. A sustained move back above that range would improve the outlook, while a failure to stabilize near $730 could expose additional downside toward 720–725. I remain in the MARKET BULLISH camp, with a longer-term upside objective of 780–810 over the coming months, but that projection now requires renewed confirmation. The bullish thesis is being tested, and investors should acknowledge that rather than assume the market will automatically return to its previous highs.

The week's most important catalyst was undoubtedly Tuesday's midterm election. Democrats won control of both chambers of Congress, shifting the political landscape for the remainder of President Trump's term and introducing new questions about regulation, fiscal policy, tariffs, and the direction of federal spending. Wednesday initially brought a relief rally, with the Dow advancing approximately 3% and the S&P 500 gaining about 1.6%. Investors appeared encouraged by the resolution of election uncertainty and the possibility that divided government could restrain some of the more disruptive policy proposals.

But that optimism disappeared almost as quickly as it arrived.

Thursday delivered a dramatic reversal, with the S&P 500 declining 4.36%, the Nasdaq dropping 5.52%, and the Dow losing more than 1,800 points. Technology and semiconductor stocks bore the brunt of the selling as investors reassessed the outlook for artificial intelligence infrastructure, data center development, and the massive capital expenditures that have supported the sector's valuations.

The challenge for artificial intelligence isn't necessarily a lack of demand. It is the growing question of how quickly companies can turn their extraordinary investments into sustainable profits. Alphabet, Amazon, and other major technology companies have already demonstrated how sensitive investors have become to increasing capital spending and pressure on free cash flow. Even otherwise respectable earnings reports can provoke aggressive selling when future guidance fails to justify current valuations.

This creates an interesting environment for stock selection. Companies with improving earnings, strong balance sheets, and measurable returns on investment may continue to attract capital. Businesses dependent on optimistic long-term assumptions or increasingly expensive financing could face considerably more pressure.

Friday's October employment report added another complication. The U.S. economy created 165,000 jobs, substantially exceeding expectations of roughly 65,000, while the unemployment rate declined to 4.1%. This suggests the labor market remains resilient despite persistent inflation, tariffs, and slowing growth in several parts of the economy.

Strong employment would ordinarily be encouraging for investors. However, it also provides the Federal Reserve with less reason to reduce interest rates, particularly when inflation remains elevated. Treasury yields climbed following the report, reinforcing the possibility that monetary policy will remain restrictive for longer than the market previously anticipated.

The 10-year Treasury yield has continued to fluctuate within the broader 4.5%–5.5% region we've been monitoring. Higher yields create competition for equities, increase financing costs, and can put additional pressure on highly valued growth companies.

At the same time, developments in international credit markets deserve attention. French government bonds continue to carry elevated risk premiums relative to German Bunds, reflecting ongoing concerns about fiscal stability and political uncertainty. In the United States, investment-grade corporate credit has remained comparatively orderly, but the weakest high-yield borrowers face considerably greater refinancing pressure.

That divergence is important. The credit market isn't signaling uniform distress, but investors are becoming increasingly selective about which companies deserve financing and at what price.

Energy is another major variable. The conflict involving Iran continues to affect global oil markets, with uncertainty surrounding Middle Eastern supply routes adding a geopolitical risk premium to crude prices. Although oil has retreated from previous peaks, prices remain elevated and volatile. Higher energy costs can filter through transportation, manufacturing, and consumer spending, creating another obstacle for policymakers trying to contain inflation without undermining economic growth.

Tariffs remain part of that equation. Businesses are still adapting supply chains and pricing strategies to changing trade policies, and the effects are not always immediately visible in headline economic reports. Combined with oil prices and higher financing costs, these pressures could weigh on corporate margins even when revenues remain relatively stable.

The volatility index illustrates how quickly the market's mood has changed. After trading around 18 during the previous period, the VIX surged to 28.18 on Thursday before easing during Friday's rebound. That is a significant increase in expected volatility, and one that should influence both position sizing and the types of strategies traders are willing to employ.

Looking ahead, next week brings two particularly important inflation reports. The October Consumer Price Index is scheduled for Tuesday, November 10, followed by the Producer Price Index on Friday, November 13. These readings will help determine whether inflationary pressures are moderating or whether strong employment, elevated energy costs, and tariffs are complicating the Federal Reserve's policy outlook.

Corporate earnings will remain influential as well, especially for companies involved in AI infrastructure and enterprise technology. Investors will be watching not just whether companies beat estimates, but whether their earnings, spending plans, and forward guidance justify the valuations assigned to them.

My expectation is that volatility will remain elevated as the market works through this correction. There is reason to believe that selling in certain technology stocks may be approaching exhaustion, but a durable bottom requires more than one encouraging session. We need stabilization in yields, improving market breadth, and evidence that institutional investors are willing to rebuild positions.

The long-term market trend may still recover, but near-term risks have increased. Recession concerns, geopolitical uncertainty, and the possibility of higher-for-longer interest rates all argue for a disciplined approach.

This is definitely a stock picker's market, and risk management should remain at the forefront of every investor's mind.

Sign up Today— Sunday’s pick could be a midterm leader

What’s your plan when the market turns?

Not if. When.

Because here’s the thing most trading services won’t tell you: catching momentum stocks is only half the game. The other half — the half that actually determines whether you keep the money you make — is managing drawdowns.

I’ve watched too many traders have a great quarter, give it all back in two weeks, and quit.

That’s exactly what Dynamic Power Trader is built to prevent.

Let me show you what the upgraded model is actually doing right now.

Last week — Accenture ($ACN): closed for +30% profit

The model flagged ACN as the setup was forming — strong relative strength vs. the broader IT services group, improving institutional flow signals, and a volatility regime that favored our put spread structure. We entered, managed the position, and closed it for over 30% profit in days, not weeks.

Click Here to Learn More About Dynamic Power Trader

Sector Spotlight

One of the most interesting developments in this week's market has been the growing divergence between technology stocks, which have been particularly vulnerable to rising interest rates and concerns about artificial intelligence spending, and other areas of the economy that could benefit from improving fundamentals or changing government policies.

Healthcare has emerged as one of those areas, although the opportunities are far from uniform across the sector.

The Health Care Select Sector SPDR Fund (XLV), which provides broad exposure to pharmaceutical companies, healthcare equipment manufacturers, insurers, and other healthcare businesses, experienced considerable volatility surrounding the midterm elections. The ETF advanced to approximately $189.66 on Wednesday before retreating to $184.91 during Thursday's market selloff. Friday brought some stabilization, with XLV trading around $185 during the session.

But the more revealing action came within managed-care companies and hospital operators, where the election results created a potential shift in expectations for government healthcare spending.

With Democrats winning control of the House and Senate, investors began reassessing the prospects for Medicaid funding, Affordable Care Act subsidies, and restrictions on government-supported health insurance enrollment. Wednesday's reaction was significant. Centene (CNC) rallied approximately 12.6%, Molina Healthcare (MOH) advanced about 8.9%, and hospital operators including HCA Healthcare and Universal Health Services experienced similarly strong buying interest.

 

The reason is straightforward. Several provisions of the current administration's healthcare legislation are expected to reduce Medicaid enrollment and constrain certain payments to hospitals and insurers. A Democratic-controlled Congress could seek to delay parts of those changes, negotiate additional funding, or revisit enhanced Affordable Care Act subsidies that help households purchase health insurance.

For companies such as Centene and Molina, which have substantial exposure to Medicaid and the Affordable Care Act marketplaces, even a modest improvement in the policy outlook could have meaningful implications for enrollment, premium revenue, and earnings expectations.

However, investors should be careful not to confuse a favorable election outcome with an immediate change in federal healthcare policy. President Trump retains veto authority, and negotiations between Congress and the White House could produce gridlock rather than meaningful legislation. Much of Wednesday's rally reflected expectations about what might happen, not changes that have already taken place.

That distinction became evident almost immediately as healthcare shares gave back some of their gains during Thursday and Friday's broader market volatility.

There is also a larger economic argument worth considering.

As investors question the enormous capital expenditures required to support artificial intelligence, businesses with more established revenue streams and identifiable earnings drivers may attract greater attention. Healthcare demand is generally less dependent on the economic cycle than discretionary spending, and government-funded insurance programs provide a significant source of recurring revenue for managed-care companies.

That doesn't mean healthcare is immune to recession risks. Medicaid enrollment, government budgets, medical inflation, reimbursement rates, and regulatory changes can all influence profitability. In addition, elevated interest rates and tighter credit conditions may weigh on highly leveraged healthcare providers, while higher medical utilization can pressure insurer margins.

Still, at a time when the Nasdaq is struggling, volatility has increased sharply, and investors are becoming more selective about where they commit capital, healthcare provides an important alternative to the increasingly crowded technology trade.

The key will be identifying companies whose underlying operations are improving independently of the latest political headlines. I want to see encouraging earnings trends, manageable medical costs, improving margins, and evidence that the market is rewarding those developments with sustained buying interest.

For that reason, I'm paying particularly close attention to managed-care companies, where the combination of improving fundamentals and potential policy changes could create opportunities over the coming months.

Trade of the Week: Centene Corporation (CNC)

This week's Trade of the Week candidate is Centene Corporation (CNC), one of the largest managed-care organizations in the United States, with substantial operations in Medicaid, Medicare, and the Affordable Care Act health insurance marketplaces.

At first glance, a health insurer might seem like an unusual choice during a week dominated by the collapse in technology stocks, volatile Treasury yields, and uncertainty following the midterm elections.

But that is precisely what makes the company interesting.

While much of Wall Street is reconsidering how much it should pay for the future earnings potential of artificial intelligence companies, Centene offers a different investment thesis. Its opportunity depends less on speculative long-term technological growth and more on improving insurance operations, controlling medical expenses, managing its balance sheet, and potentially benefiting from a more supportive healthcare policy environment.

The company's latest quarterly results provide some evidence that its operational recovery is progressing.

Another encouraging development was the company's health benefits ratio, which measures the proportion of premium revenue used to pay medical expenses. This is one of the most important profitability metrics for health insurers. When medical claims consume a smaller percentage of premiums, insurers generally have more room to cover operating expenses and generate profits.

Centene reported a consolidated third-quarter health benefits ratio of 92.7%, better than management had expected, supported by improving performance in its Medicare business. The company also reduced its full-year expected ratio, with the midpoint moving to approximately 90.75%.

These improvements may sound modest, but for a company generating nearly $200 billion in annual revenue, relatively small changes in medical cost trends can have a meaningful effect on profitability.

Management has also been addressing the balance sheet. Centene reduced debt by approximately $1.1 billion since the end of June, including the redemption of senior notes that were scheduled to mature in 2027.

That progress is especially relevant in the current environment. With Treasury yields elevated and lower-quality corporate borrowers facing growing refinancing pressure, companies that can reduce debt and improve operating efficiency may be better positioned than competitors dependent on increasingly expensive financing.

Of course, the recovery isn't without challenges.

Centene reported a GAAP loss of $0.14 per share during the third quarter despite its positive adjusted earnings. Enrollment has also declined in important parts of the business. Medicaid membership fell from approximately 12.7 million a year earlier to 11.9 million, while marketplace membership declined from roughly 5.8 million to 3.4 million.

Those figures demonstrate how sensitive the business remains to government policy, enrollment changes, and medical cost trends.

This is where the midterm election results become particularly relevant.

Democratic control of Congress could improve the prospects for preserving Medicaid coverage, delaying certain funding reductions, or restoring additional Affordable Care Act subsidies. For a company with Centene's exposure to those programs, policy changes that support enrollment could strengthen premium revenue and reduce some of the uncertainty surrounding its future earnings.

Investors recognized that possibility immediately. CNC closed Tuesday, November 3, around $67.48 before surging approximately 12.6% Wednesday to $76.01. During Thursday's session, shares briefly reached $78.08, but the market's broader reversal pulled the stock back to $74.17 by the close.

Friday's trading provided another reminder of how quickly expectations can change. Shares retreated toward $70, giving back a substantial portion of the post-election advance despite the company's improving earnings outlook.

From a technical perspective, the 69–70 region has therefore become an important near-term area to monitor. Friday's intraday decline tested approximately $69.42, making the stock's ability to stabilize around that level particularly relevant.

A sustained recovery above 72.50–74.20 would be an encouraging first step, suggesting that buyers are beginning to regain control following the recent pullback. If momentum improves, the 76–78 region, which includes the recent post-election highs, would represent the next important resistance area.

A convincing breakout above that range, supported by improving market breadth and favorable trading volume, could create the conditions for a more substantial recovery.

On the downside, a failure to hold the $69 area would raise the possibility of a retest of the $67.50 region, followed by the recent low near $64.85. Those levels would become important in assessing whether the post-election rally has established a meaningful foundation or was primarily a short-lived reaction to political developments.

In other words, I see an interesting opportunity, but I'm not interested in buying simply because the stock experienced a dramatic rally after the election.

The stronger case for Centene rests on several developments working together: improving operating performance, higher earnings guidance, debt reduction, a potentially more favorable policy environment, and the possibility that investors continue rotating capital away from expensive technology companies toward businesses with more immediately measurable earnings potential.

The greatest risk is that these expectations fail to materialize. Congress and the White House may be unable to reach a compromise on healthcare funding, medical utilization could increase, or declining enrollment could offset improvements elsewhere in the business. And with the VIX recently reaching its highest levels in months, even fundamentally attractive companies can experience sharp price swings.

Before establishing a position, I want confirmation from our Stock Forecast Toolbox across the intraday, 10-day, and six-month forecasting horizons, alongside an evaluation of the company's relative strength, broader sector performance, and current volatility conditions.

I would also favor a smaller initial position in this environment, with a clearly defined risk level, rather than committing substantial capital before the stock demonstrates that its recent decline is stabilizing.

The market is increasingly rewarding selectivity. And Centene represents the kind of company I want to evaluate more closely: one with company-specific fundamental improvements, identifiable catalysts, and a potential opportunity that isn't entirely dependent on the direction of the technology sector.

This week, I am adding Centene Corporation (CNC) to my portfolio.

And one more thing! Our track record speaks for itself from the standpoint of a Winning Trades Percentage, Average Return Per Trade, and Net Gain. Just take a look:

The consistent performance of our services is just incredible. My historical stellar performance is made possible by being right on 82.16% of all trades that I made, with an average profit of 39.60% per trade on our collective trade recommendations. To my knowledge, this trading performance is one-of-a-kind and stands alone in the marketplace for superior trading advice, where our numbers and results speak for themselves.

For the rest of 2026, the market is entering a more selective and demanding phase. On the surface, major indexes remain resilient, but underneath, investors are navigating a more complicated environment shaped by geopolitical tensions, tariff uncertainty, uneven megacap earnings, sticky inflation expectations, and renewed pressure from interest rates. At the same time, labor market data is beginning to soften at the edges, creating a setup where discipline, timing, and data-driven decision-making are becoming more important than broad market optimism.

This is exactly where YellowTunnel becomes essential.

In a market where leadership is narrowing and volatility can return quickly, investors need more than headlines and guesswork. YellowTunnel’s AI-powered tools are designed to help you cut through the noise, identify high-probability setups, track changing market conditions, and stay aligned with the strongest pockets of opportunity. Whether you are looking for real-time trade ideas, advanced stock and options analysis, predictive market data, or a more disciplined trading process, YellowTunnel gives you the structure and clarity needed to act with confidence.

As conditions tighten heading into Q4, the difference between reacting emotionally and following a proven, data-backed approach can be significant. Our goal is to help you stay prepared, stay selective, and stay focused on the opportunities with the strongest risk-reward potential.

Whether you are focused on short-term trades, portfolio positioning, options strategies, or improving your overall trading mindset, YellowTunnel provides the tools, insights, and guidance to help you navigate this market with greater precision.

Let’s work together to make the rest of 2026 a stronger, smarter, and more disciplined period for your portfolio. As always, successful investing begins with informed decisions, proper risk management, and a clear understanding of your personal goals and risk tolerance before entering any trade.

Wishing you a productive and profitable trading week!

–

I’ve had the opportunity to take additional action with a great organization supporting families in Ukraine directly. Gate.org is a foundation where fundraising is held for specific families, allocating funds to multiple families currently living in Ukraine. I am on the board of directors for this great initiative and encourage everyone to check it out and donate if possible. The war in Ukraine is escalating, and families are being negatively impacted and displaced daily. To learn more about this initiative to help families, please see the link below:

 www.gate.org