To The Moon

The US midterm election results are in.

DEMOCRATS WIN BOTH CHAMBERS OF CONGRESS.

A major political shift.

And initially, markets were nervous.

Nasdaq futures sold off sharply overnight.

But then something interesting happened.

BUYERS RETURNED.

By November 4, US stock futures were recovering.

The S&P 500 had finished the previous session at:

7,568.92

Up:

0.36%.

The Nasdaq-100 was around:

28,180

in the latest market snapshot.

And inverse ETFs?

Already under pressure as futures recovered.

So here's the question.

Should investors buy SQQQ or SPXU now to protect their gains?

My answer may surprise you.

NOT NECESSARILY.

Because I think the biggest danger after this election isn't simply another market correction.

It is:

BUYING THE WRONG HEDGE AT THE WRONG TIME.

And there is one number every investor considering leveraged inverse ETFs should understand.

13.3%.

I'll explain why.

🔥 FIRST, WHAT CHANGED AFTER THE ELECTION?

Democrats have taken control of the House and Senate.

President Trump remains in the White House.

That creates:

DIVIDED GOVERNMENT.

And divided government can have two very different market implications.

🟢 THE BULLISH INTERPRETATION

Major legislative changes become harder to pass.

Markets gain clarity about the political landscape.

Some investors welcome reduced prospects for sweeping fiscal legislation.

And attention returns to earnings, interest rates and economic growth.

🔴 THE BEARISH INTERPRETATION

Political gridlock could complicate budget negotiations.

AI infrastructure and data-centre expansion may face more scrutiny.

Tax and regulatory expectations could change.

And policy disputes may create fresh uncertainty.

So which interpretation wins?

I think the market has already given us an important clue.

THE INITIAL SELLOFF DIDN'T HOLD.

That doesn't guarantee a sustained rally.

But it tells me buyers are willing to challenge the bearish narrative.

And when a market rebounds after potentially negative news?

I PAY ATTENTION TO THE BUYERS.

Not just the headlines.

🚨 HERE'S WHY SQQQ CAN BECOME A TRAP

Most people understand that:

SQQQ = -3X DAILY NASDAQ-100

and:

SPXU = -3X DAILY S&P 500.

But here's what many investors underestimate.

These products reset their exposure daily.

They are NOT designed to deliver exactly three times the opposite of an index's cumulative return over several days.

Let me demonstrate.

Imagine the Nasdaq-100 starts at:

100.

On Day 1, it falls:

10%.

Index:

100 → 90

A hypothetical perfect -3X daily ETF gains:

30%.

So $100 becomes:

$130.

Wonderful.

But on Day 2, the Nasdaq recovers 11.11%.

Index:

90 → 100

Back to where it started!

What happens to the inverse ETF?

It loses approximately 33.33% that day.

Your $130 becomes:

$86.67.

The index?

FLAT.

Your inverse ETF?

DOWN 13.33%.

And that is BEFORE fees and tracking differences.

This is the danger.

YOU CAN BE RIGHT ABOUT VOLATILITY AND STILL LOSE MONEY.

The larger the daily swings and the longer the holding period, the more path-dependent your outcome becomes.

That is why I would never casually treat SQQQ as permanent portfolio insurance.

🧠 SO HOW WOULD I ALLOCATE MY HEDGE?

First, I distinguish three things.

1. LONG-TERM INVESTMENTS

Quality companies I still want to own.

2. SHORT-TERM TRADING EXPOSURE

Positions I may reduce if market conditions weaken.

3. TEMPORARY HEDGES

Positions designed to offset a defined portion of my downside risk.

I would rather protect gains by reducing excessive positions first.

Then hedge what I still want to retain.

Here's an illustration.

Suppose I have:

$20,000 PORTFOLIO.

Of which:

$15,000 is Nasdaq-like equity exposure.

$4,000 is cash.

$1,000 is allocated to SQQQ.

That $1,000 SQQQ position targets approximately:

$3,000 OF INVERSE NASDAQ EXPOSURE

over a single day.

So it approximately offsets:

20% OF MY $15,000 NASDAQ EXPOSURE.

Not 100%.

And that is intentional.

If the Nasdaq falls 2% in one day?

My $15,000 Nasdaq-like holdings lose approximately:

$300.

SQQQ could gain around:

$60.

Net effect:

-$240.

Before fees, tracking error and differences between my holdings and the index.

I have reduced the damage.

Not eliminated it.

And if Nasdaq rallies instead?

The same hedge reduces my upside.

That's the trade-off.

For investors uncomfortable with 3X exposure, PSQ offers -1X daily Nasdaq-100 exposure, while SH targets -1X daily S&P 500 exposure.

These still reset daily, but involve less leverage.

HEDGE SIZE SHOULD MATCH THE RISK I WANT TO OFFSET.

Not how nervous I feel after reading the news.

📍 MY POST-ELECTION TRADING PLAN

Here is what I would do over the next several sessions.

🟢 SCENARIO 1: MARKET RALLY HOLDS

The S&P 500 maintains its recovery.

Nasdaq buyers continue participating.

Semiconductors recover.

Market breadth improves.

My approach?

KEEP MY CORE LONGS.

I would not automatically buy SQQQ.

Instead, I would trim stretched positions selectively and allow strong companies to continue performing.

Because hedging too aggressively into a genuine recovery can be expensive.

🟡 SCENARIO 2: THE REBOUND FAILS

The market opens strongly but repeatedly sells off.

Nasdaq loses its recent recovery levels.

Selling volume expands.

Semiconductors begin underperforming.

Now I become more interested in protection.

I would consider hedging a defined portion of my Nasdaq exposure with PSQ, or using a smaller SQQQ position if actively monitoring it.

But only after the price action confirms weakness.

I WANT THE MARKET TO PROVE THE HEDGE IS NEEDED.

🔴 SCENARIO 3: ANOTHER BROAD SELLOFF

Major indices break their recent lows.

Market breadth deteriorates.

Several sectors fall together.

Now protecting capital takes priority.

I would reduce vulnerable long positions first, especially leveraged ones.

Then assess whether a temporary inverse ETF position still improves my overall risk.

Because if I am already heavily in cash?

I don't need to pile on a massive short bet.

CASH IS ALSO A HEDGE.

And unlike SQQQ, cash does not lose money simply because the Nasdaq rallies.

🔮 MY THREE MARKET SCENARIOS

Subjective probabilities for the next 1-2 weeks.

🟢 BULL CASE: 30%

Election uncertainty fades.

Strong earnings support technology.

Nasdaq and S&P 500 continue recovering.

My approach:

KEEP CORE LONGS. MINIMAL HEDGE.

🟡 BASE CASE: 50%

Political uncertainty remains, but earnings support the market.

Indices trade sideways with sharp rotations.

My approach:

TRIM EXCESS RISK. HOLD CASH. USE SMALL, SHORT-LIVED HEDGES ONLY WHEN CONFIRMED.

🔴 BEAR CASE: 20%

Regulatory concerns, weak earnings or broader macro pressure overwhelm the post-election rebound.

Indices break recent lows.

My approach:

REDUCE EXPOSURE FIRST. ADD PROTECTION SELECTIVELY.

🔵 WHAT ABOUT NVDA, AMD, MU, PLTR AND MSTR?

This is especially important for my own watchlist.

NVDA, AMD AND MU

These are sensitive to AI infrastructure expectations.

A Nasdaq hedge may offset some market-driven weakness.

But individual earnings or sector developments can still overwhelm index hedging.

PLTR

An exceptional company can still suffer valuation compression.

SQQQ may help offset broad technology selling, but it cannot guarantee protection against PLTR-specific repricing.

MSTR AND CRCL

These are different.

Bitcoin sentiment, crypto liquidity and regulatory developments can dominate their movements.

I would NOT assume SQQQ provides an effective hedge for my crypto exposure.

MATCH THE HEDGE TO THE ACTUAL RISK.

🚨 MY EXIT RULES FOR INVERSE ETFS

This is where discipline matters.

I would review a 3X inverse position daily, and preferably use it only for a short, clearly defined trade.

If the index reclaims the breakdown level?

I EXIT OR REDUCE THE HEDGE.

If selling fails to follow through?

I DON'T KEEP BETTING ON A CRASH.

If the hedge delivers its intended protection?

I TAKE THE PROTECTION.

And if I cannot monitor the position?

I prefer reducing my long exposure or using a less leveraged approach.

Because the point of a hedge is not to maximise gains from a market collapse.

It is to:

PRESERVE CAPITAL WHILE KEEPING MY LONG-TERM STRATEGY INTACT.

🔥 MY CALL: THE BIGGEST POST-ELECTION MISTAKE MAY BE OVERHEDGING

Democrats have won Congress.

Washington's political balance has changed.

But the stock market is already demonstrating something important.

POLITICAL UNCERTAINTY DOES NOT AUTOMATICALLY EQUAL FALLING STOCK PRICES.

Investors still have to assess earnings, liquidity, valuations and actual price action.

My preferred strategy?

KEEP QUALITY.

TRIM EXCESS RISK.

RETAIN CASH.

HEDGE ONLY WHAT NEEDS HEDGING.

And above all:

DON'T TURN PORTFOLIO INSURANCE INTO ANOTHER SPECULATIVE POSITION.

Because after the midterms, my biggest concern isn't that I might miss the next market correction.

It is that I might become so obsessed with protecting yesterday's profits that I sacrifice tomorrow's opportunities.

PROTECT THE PORTFOLIO. NOT THE PREDICTION.

I am not a financial advisor. Trade wisely, Comrades!

After the midterms, are you keeping your core stocks, trimming profits or using SQQQ/SPXU to hedge?

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