Stocks became surprisingly perky on Monday, the day before the election that everyone seems to be fearing. The Dow gained 423-points which, along with small caps, led the market on upside. That wasn't exactly 2016-like when stocks were declining sharply right up to, and including, election day. One positive day with the VIX still in the high 30's may not mean much yet.
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The positive reversal on Friday was one thing, and that does tend to bring follow up movement in the same direction as the reversal, which it did, but that happened the day before election day - the day many have been holding their breath in fear that it is going to cause a major sell-off. Of course the market rarely does what we all expect.
You would have thought that talks of more shutdowns in Europe would have scared investors yesterday, but investors were not scared heading into today's election. As you'll see in the various S&P 500 election year charts below that go back to the 2000 election, we don't always get the same reactions leading into election day.
I was under the impression that we were going to sell off into this election, similar to the 2016 chart below. That didn't happen yesterday.
If stocks flip back over on Tuesday, then we would see a chart that looks more like the 2012 chart below where it was quite choppy until election day, and then it tumbled afterward.
The one that may get your attention is the 2000 chart above, which was the last time we had an election where it took a long time before a winner was called. The market wasn't too thrilled with that.
At this point only stimulus, maybe earnings, or a vaccine announcement could overrule any election reaction, so I'll go light on the speculation. I was thinking we could rally after the election, but that was based on a sell off leading up to it, so yesterday threw me a curve.
The October jobs report comes out on Friday and, depending on the status of the country in the aftermath of the election, this may or may not be something the market will be too focused on. But if it is a factor, the estimates are looking for a gain of about 675,000 jobs, and an unemployment rate of 7.7%.
The S&P 500 (C-fund) rallied nicely yesterday, but closed well off the highs of the day, and off the lows, but those spinning tops could be an indication that the market is ready to change directions. That doesn't mean it can't chop around in that blue box for a while to make us question what we think will happen. The one in early September broke down, and then the one later that month broke to the upside. The futures are up on Monday night as I write this but it wouldn't be a huge surprise to see a down day to day to keep this "chop" alive until at least Wednesday.
The DWCPF (S-fund) led on the upside and that's usually a good sign for the market when investors are willing to go into more risky positions. But it closed below the 50-day EMA again, and below the support line of the blue trading channel, so there are some headwinds coming into Tuesday.
The EFA (I-fund) has been hit hard with Europe starting to shutdown again on increase COVID counts. There was a lot of damage done to the chart, but like the U.S. funds, they should react to the election in a similar manner.
The price of oil had been coming down with the COVID case counts rising, but yesterday there was a big positive outside reversal created, and it looks bottom-like. The immediate problem right now is that it needs to overtake the old support line that broke down last week near 37.
The VIX came down on the market rally, but not exactly a plummet despite a 400+ point rally. It still sits at 37 and change, and that means investors continue to expect more wide swings, so buckle up!
BND (F-fund) rallied off the lower end of that descending trading channel yesterday. there could be some resistance near 87.65, otherwise I suppose it could climb all the way back to the top of the channel, especially if stocks get cranky again after the election.
Read more in today's TSP Talk Plus Report. We post more charts, indicators and analysis, plus discuss the allocations of the TSP and ETF Systems. For more information on how to gain access and a list of the benefits of being a subscriber, please go to: www.tsptalk.com/plus.php
For more info our other premium services, please go here... www.tsptalk.com/premiums.html
Thanks for reading. We'll see you back here tomorrow.
Tom Crowley
Posted daily at www.tsptalk.com/comments.php
The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.
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The positive reversal on Friday was one thing, and that does tend to bring follow up movement in the same direction as the reversal, which it did, but that happened the day before election day - the day many have been holding their breath in fear that it is going to cause a major sell-off. Of course the market rarely does what we all expect.
You would have thought that talks of more shutdowns in Europe would have scared investors yesterday, but investors were not scared heading into today's election. As you'll see in the various S&P 500 election year charts below that go back to the 2000 election, we don't always get the same reactions leading into election day.
I was under the impression that we were going to sell off into this election, similar to the 2016 chart below. That didn't happen yesterday.
If stocks flip back over on Tuesday, then we would see a chart that looks more like the 2012 chart below where it was quite choppy until election day, and then it tumbled afterward.
The one that may get your attention is the 2000 chart above, which was the last time we had an election where it took a long time before a winner was called. The market wasn't too thrilled with that.
At this point only stimulus, maybe earnings, or a vaccine announcement could overrule any election reaction, so I'll go light on the speculation. I was thinking we could rally after the election, but that was based on a sell off leading up to it, so yesterday threw me a curve.
The October jobs report comes out on Friday and, depending on the status of the country in the aftermath of the election, this may or may not be something the market will be too focused on. But if it is a factor, the estimates are looking for a gain of about 675,000 jobs, and an unemployment rate of 7.7%.
The S&P 500 (C-fund) rallied nicely yesterday, but closed well off the highs of the day, and off the lows, but those spinning tops could be an indication that the market is ready to change directions. That doesn't mean it can't chop around in that blue box for a while to make us question what we think will happen. The one in early September broke down, and then the one later that month broke to the upside. The futures are up on Monday night as I write this but it wouldn't be a huge surprise to see a down day to day to keep this "chop" alive until at least Wednesday.
The DWCPF (S-fund) led on the upside and that's usually a good sign for the market when investors are willing to go into more risky positions. But it closed below the 50-day EMA again, and below the support line of the blue trading channel, so there are some headwinds coming into Tuesday.
The EFA (I-fund) has been hit hard with Europe starting to shutdown again on increase COVID counts. There was a lot of damage done to the chart, but like the U.S. funds, they should react to the election in a similar manner.
The price of oil had been coming down with the COVID case counts rising, but yesterday there was a big positive outside reversal created, and it looks bottom-like. The immediate problem right now is that it needs to overtake the old support line that broke down last week near 37.
The VIX came down on the market rally, but not exactly a plummet despite a 400+ point rally. It still sits at 37 and change, and that means investors continue to expect more wide swings, so buckle up!
BND (F-fund) rallied off the lower end of that descending trading channel yesterday. there could be some resistance near 87.65, otherwise I suppose it could climb all the way back to the top of the channel, especially if stocks get cranky again after the election.
Read more in today's TSP Talk Plus Report. We post more charts, indicators and analysis, plus discuss the allocations of the TSP and ETF Systems. For more information on how to gain access and a list of the benefits of being a subscriber, please go to: www.tsptalk.com/plus.php
For more info our other premium services, please go here... www.tsptalk.com/premiums.html
Thanks for reading. We'll see you back here tomorrow.
Tom Crowley
Posted daily at www.tsptalk.com/comments.php
The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.
