Stocks Fell After the Election… History Says Pay Attention

So, the market got scared last night. Yep. Democrats swept the midterms and took control of Congress with key states like Michigan and Texas and futures dropped hard overnight and immediately everybody thought, "Yo, IS THIS BAD FOR THE MARKET?" And then this morning, the market opened up with a rally with NASDAQ being up big, S&P being up big, and so have small caps. And so what I want to do is I want to break down a few things in this video how we should be prepared for the next six months because yes, the Republicans got swept out of the office. Yes, the Democrats are in, but that's also could be a lot of gridlock, which also can open up a lot of shutdowns moving forward. And so what I want to do is I want to show us and prepare us for what can be ahead based on the data and show you exactly three companies to five companies that I'm looking for that at a really great discount during this market. And so before we get into this, man, it's your boy the Wall Street Trap. Make sure you like and subscribe and help us get this video to 2,000 likes. This is the most important time for us as new investors and new traders to be in this market. I want to help us navigate that. Let's go. So, while everybody was panicking last night, basically we seen this movie before and I we was doing trapping Tuesdays last night and everybody was just like, "Man, the market is falling." And then boom, S&P woke up a 1%, NASDAQ was up at most 2% at the highs of the day. And small caps actually started coming to life. And because history tells us something that I want us to pay attention to before we get into the companies that since 1938, the S&P has been positive the 12 months after the midterm. That's 95% of the times, not 55%, not 65%, 95% of the time. And the average return in the 12-mon time span has roughly been about 14%. Now, whoopdedoo. That's cool, but I want you to listen carefully. That does not guarantee that we'll get 14% from here because history is actually not a promise, but history really gives us context on a lot of things that's going on. But I dug a little deeper into that and I want to understand something that's working in our favor. Now, we've just historically entered the best six months or the strongest six months of the year, which is between November through April. So, I'm looking at something. I'm looking at the market really different right now. Now, here's what I want to say. Between that time, here's some more data that the market tells us. Since 1945, in this same time frame and that six-month time frame, the market has actually given us about 8% in that six-month time frame between November and April, which has actually been the strongest part of the year with November being one of the strongest months in the year. Now, again, this is just data. Now, to go a little further than that, watch this. In the three months after the midterm election, the market has actually given us about 4%. And so that means that November, December, January has been really been strong. And then February, March, April can kind of wind that out, which I'm not mad at that cuz when I think back a little bit, that is kind of what I've seen just based on historical data. But midterms kind of enlighten that. Now, I got to double down on something a little bit stronger right here in this point. Before we get to the stocks, I got to let you know this. based on those Democratic states who are now in office. They actually oppose 45% especially states like Texas, they oppose data center buildouts in their states. Now that is going to truly truly truly cause some conflict with these AI buildouts. Now remember, because Republicans were in office, they were with the data and the growth and regulations so on and so forth because of course the president has money inside of these things. And not to mention, he's lost $73 million in this time frame alone. Just because of the Democrats getting in office, the president has lost $73 million. Now, let me say this, too. No matter who you voted for, I just want to say to you, congratulations because you actually fulfilled your civic duty. Now, I want us to get back to the money. Whoever's in office going to do what they supposed to do. You voted for who you voted for. And then hopefully whoever you voted for, if they are in office, then you want them to do what we put them in office to do. And if not, hey, you got a presidential election in two more years. You gather the troops and you get back to it. For me, I want to help us navigate this market because this is what's important for us. No matter who's in office, we still got to put money and food on our table and we got to build our wealth through this market. So, let's get a little further. I always tell my people that we don't really too much focus on what's happening on overnight because overnight can be something completely different in the morning. And we truly got to watch the AI infrastructure. Again, I've said it before that Democrats have shown more willingness to scrutinize and really like say those data centers are not good. One is because of energy use, AI regulation, and infrastructure expansion. And we're seeing pressure in data center names today because investors are really asking like, bro, like will it be harder to build? That is the real risk. We also got to see like are is the money going to come out of here? because as of right now only Microsoft is making money because again remember Google has negative free cash flow for the first time and Meta. So we definitely got to see that. So I think that we have some great companies on sale though and I don't mean just buying just because the stock fell. I'm saying that's one of the fastest ways that you lose money. Like trash can be cheap for a reason. But we want three things and I want to walk us through these three things so that we can actually start looking at companies. Right? So the first thing is we want strong revenue. What I mean by strong revenue is this called topline. We want to see that money increase. We want to see strong earnings. Mean after they pay off everything, we want to see those earnings growing. We want to see strong demand, which is necessary. And then something that's really necessary. Second, I want price to be washed out. And what I mean by this, maybe the stocks fall below it 200 day moving average. That's what I want. Maybe momentum is approaching oversold, which is the RSI. That's what I want because the stock can be 20 to 30% over off its all-time highs. And that is how we get in position. I want long-term stories that are still intact. And that's the most important part for us because if the reason I want to own something that can't be broken, I still want that in fire. So I don't want to be catching a fallen knife. I want to be catching companies that are still have high demand. And again, go through the things that I talked about, right? And so when I say high demand mean that service is still in demand, which brings me to the first company I want us to look at, TSMC. Now, hey, listen. If you are truly confused about what's going on in the market and you don't know how to make your next step, I want you to come join us in our Patreon community. Man, listen, we do something phenomenal up in there. And it doesn't matter if you're a new investor or intermediate investor or you've been investing for a while or if you're a trader in one of those levels. Now, I will say I am not a day trader. I'm a swing trader. So, I like to trend on momentum and I like to trade trends. This is what we do and we do it really well. We do we call progressive trading. And simply what that means is when the market is doing really really good for us, we trade big, which is why we have phenomenal numbers. But when the market is trading not the way we want, we go small or we sit on the side. We're not trying to make $1,000 a day or $100 a day. We want to make the most money while the market is in our favor. And this is from trading. But also, we work on the buy and hold side because when the market is giving us great opportunities and discounts, like right now, guess what we doing? Finding positions. And we want to help you navigate all of that so you're not by yourself. So guess what? Come join us now. And guess what? At the top, in any top tier, you get a 7-day trial. So any plays that I put in while you're in for free can actually have the potential to pay for itself. It's your boy the Wall Street tribe and I want to invite you to come join us in the money printers. I'll see you in a trap salute. I know trap. You just talked about data center buildouts. Well, I'm not worrying about data center buildouts because without TSM, there is no chip at all. And the easiest way to understand this is this. A lot of companies design great chips, but TSM actually manufactures them. Nvidia designs GPUs. Apple designs chips. AMD designs chips. Broadcom designs chips. But those designs have to be physically manufactured somewhere. And TSM is the most important advanced chip manufacturer in the world, right? Think about it like this for a second. Nvidia may draw the blueprint for the Ferrari engine. And I like that. But TSM owns the factory capable of actually building the engine. And this is why TSMC is important, why it matters. And the numbers don't look like a broken business. You got to think just last quarter that they just reported revenue $47 billion in revenue and revenue grew by 41%. That's US dollars. Net income grew 69% year-over-year and the gross margins was 66% over the year. And so that tells us that they represent about 70% of their revenue. Now it's high performance computing and the category includes much of the AI demand which represents 68% of quarterly revenue which grew by 22%. So when TSM gets sold, I'm asking myself, did Nvidia stop needing chips? Did Apple stop needing chips? Did AMD stop need chips? Did the AI stop moving towards smaller, more advanced chips? Nope. So today TSMC is trading under the 200 day moving average and it's fallen about 19% from it recent high and for me this is something to pay attention to. Now I want to see if again that RSI could come below 200 but this becomes a great buying opportunity because the entire semiconductor chain has been falling but this company is needed. So no advanced manufacturing no chips and this is why I like TSMC. Second on my list is Broadcom. Now, this is the road inside of the AI factory. Now, think about it like this for a second. Broadcom, ticker symbol AVGO, a lot of people think Nvidia is the whole AI trade. And I don't know, like they missing so much of the trade. But when you build a giant AI data center, the chip has to communicate with each other. So, they not building a data center, they got the chips now. And this is where Broadcom becomes incredibly important. Think of the AI data center as a city. And Broadcon helps the roads in between them. They helps the networking, they help the switches, they help the connectivity, they help custom AI chips. Broadcom has also become a major player in what is called acceleration of the hyperscalers who want to rely completely off their own GPUs. So let's look at the financials for a second. Broadcom's last quarter produced about 29 billion in revenue. That was up 86% on a year. And the company generated about 13 billion in free cash. So that's money after they paid everything off. And that was about 40% of the revenue. Now think about this. Quarter to quarter, it brought about $34.8 billion. This is not a weak business. Yet ABG has fallen about 35% from its high. It's below its 200 day moving average. And again, I'm asking myself, what changed besides the stock price? Is there still demand? Yes. Do they need to bid out a massive data center? No. Do networking and custom silicone still need it? Yes. The difference is price is telling you investors are nervous and the business is telling you demand is still strong. And I like when those two things disconnect because eventually one of them usually has to catch up to the other. And this is why I like TSM. And third on my list is KLAC. This is the company checking every chip. Now the third one, this one is probably new to most investors cuz they don't hear about it a lot cuz it's not over the screen. But KLAC doesn't manufacture chips. It manufactures something just as important. The equipment used to inspect the chip manufacturing process. So let me explain to you. Imagine you're building semiconductors where features are measured in nanometers which is really small. One microscopic defect can ruin an expensive chip. And the manufacturers need the machines capable of inspecting those, finding those defects, making sure that everything is being manufactured correctly. That is KAC. Think of them like a quality control for semiconductor industry. And the smaller and more complicated chips become, the harder quality control becomes. So AI helps KAC become the leading edge chip getting more complex and advanced packaging. And so memory gets more complex. And that means manufacturing have to spend more money that they need to produce these chips. Because think about it, let's talk numbers. 4.1 billion last quarter about 3.2 too early in the year. Free cash flow came in about 1.3 billion and management guided up the next quarter approximately 4.7. Management specifically said impress that they will become one of the most important companies in AI not just about memory but about the inspection of the chips. Another company that is trading below it 200 day moving average and I just see this as another stock that's on sale. This is exactly I want you to do the homework too because KLSC doesn't specifically need to win the chip race. TSMC needs inspection. Memory companies need inspection. Advanced packaging needs inspection. Semiconductor factories need inspection. And the chip gets harder to make. So KAC becomes necessary. That's the moat. That's it. And I think a lot of people just missing the point. They overthinking it because so much fear is in the market. So I want to put this together for you. Right. The market got scared about the election, history tells us that postmidterm periods typically go stronger. And so while each one of these companies present something different, they all are necessary to the actual buildout of AI. They're not building massive data centers. They're just saying, I'm not tripping on the people that's building the data centers because they need me. Now, no one knows where the bottom is, and I don't know where the bottom is either. So here's my plan for that as well. make a position in these companies and if they fall 5% I buy a little more. If they fall 7 to 10% I buy a little more. They fall another 5% I buy a little more and then 7 to 10% I buy a little more. At that point I'm averaging down at a significant price to help me bring my cost basis down. And so TSMC is for manufacturing, KAC is for quality control and AVGO is for connectivity and premium design. You put these three companies together and you found a discount, but something that is essential for the AI buildout. And if you ask me, if the market is going to give me a discount, I'm not going to pass it up. It's your boy, the Wall Street Trapper. Make sure you like and subscribe and share this one out. Salute.